Regis eyes European expansion with merger

The merger will give the companies combined revenues of nearly €300m and will help push the global revenues of Regis over the $900m (€635m) mark, further extending its leading position worldwide. It will also mean that the companies will run over 2,200 salons as a combined effort, for which professional hair care lines and treatments will be supplied for customer use during visits. Extensive ranges of salon hair care products for home use will also be sold. Currently the Franck Provost Group runs 200 company-owned salons and 400 franchised salons with system-wide revenues in excess of €200m. Paul Finkelstein, Regis CEO, said that the merger would help to ensure that European operations continue their current 'strong and consistent cash flows', adding that the fiscal 2007 results for the region were already above forecasts. "The Provost returns are spectacular,​" said Finkelstein. "Having a 30 per cent minority ownership with a strong local management team in this much larger entity with tremendous growth opportunities is the optimal strategy to become a market leader in Europe.​" Furthermore the merger is also expected to provide more growth opportunities in continental Europe for the company, helping to expand it beyond its current focus on the UK market. Regis said that the Provost management structure has a proven platform for growth opportunities to build the company further through acquisitions, as well as a strong franchise operation that is also positioned for expansion. Terms of the deal mean that Regis will maintain a 30 per cent interest in Provost and that the current Provost management team will continue to oversee the operations, led by founder and chairman Franck Provost. Regis has struggled to regain ground since its failed buy-out by Alberto-Culver at the beginning of last year. Although the failure of the deal saw the company benefit from a $50m penalty payment by Alberto-Culver due to the last minute termination of the deal, it also meant that that company was unable to secure the cash injection it needed to ensure further investment and expansion. In August of this year Regis announced a 47 per cent drop in its quarterly income, although the figure for the previous year had been positively impacted by the penalty fee paid by Alberto-Culver. Revenues for the financial year 2007 were up 8 per cent to $2.67bn, while revenues for the first quarter came in slightly above expectations at $668m, an increase of 4.4 per cent.