Regis completes European franchise merger

By Simon Pitman

- Last updated on GMT

Salon hair care provider Regis says it has completed the merger of
its continental European franchise salon operations with the Franck
Provost Salon Group.

The company first announced its intention to invest in the Franck Provost business back in October last year, when it stated that it would prove to be a vital part of its plans to expand in the European market.

As a result of the transaction's completion, Regis now owns a 30 per cent minority share in the newly formed business, which will be known as Provaillance Group.

This new business is set to be the largest hair salon company in Europe, providing Regis with the key footing it needs to further expand into the market, beyond its current base in the UK.

Merger will boost global revenues 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. Confirmation of the Franck Provost merger comes a few weeks after Regis announced that it had acquired leading salon players PureBeauty and BeautyFirst in the US.

Regis expands footprint in the US The company says that the newly acquired chains will play a highly significant role in the future of Regis with its existing Trade Secret salons being re-branded to PureBeauty and most of its Beauty Express salons to BeautyFirst.

The operations of the PureBeauty and BeautyFirst consist of 63 company-owned salons and 51 franchise salons operating in 20 states with consolidated annual revenues of approximately $65 million.

Including the sales of franchises, system-wide sales are approximately $110 million.

Regis has struggled to regain ground since its failed buy-out by Alberto-Culver at the beginning of last year, but is trying to develop new growth opportunities through acquisitions.

Failure of Alberto-Culver buy-out 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, but also meant that the 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.

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