The business produces hairdressing and beauty products for salon and general retail categories and has a workforce of around 2,200 worldwide, including subsidiaries in the US, Italy, Mexico and all over Europe and Latin America.
TCG currently estimates that approximately 50 percent of its sales are in the Europe, Africa and Middle East market, with 40 percent in the United States and the remainder being from other worldwide regions.
Global leverage and exposure to the professional beauty category
In particular, the company is hoping that the global leverage will give Revlon more exposure, particularly in the European market, where it is still a relatively small player.
Revlon says that it will be funding the acquisition through funds that have been underwritten by Citigroup Global Markets, while the deal is expected to be subject to some adjustments before it is finally closed, during the company’s fourth quarter.
“This acquisition, which we expect to be accretive to cash flow and earnings in the first year, represents a significant and logical strategic step forward for Revlon as it complements our core business, expands our distribution into new channels, and provides meaningful cost synergy opportunities,” Revlon president and Chief Executive Officer, Alan Ennis said.
Complementing the Revlon business and providing synergies
The deal is said to complement the Revlon business because The Colomer Group already markets and sells beauty products to both professional and other retail channels.
The professional brands that TCG already handles on behalf of Revlon include Revlon Professional hair care, a number of professional nail polish brands, including the Shellac franchise, as well as American Crew men’s hair care.
In particular this side of the business gives Revlon a step up into the professional brands arena, following in the footsteps of other big players such as P&G and Unilever, which have both made acquisitions in this arena during the course of the last two years.
The premium prices charged by salon-focused professional brands often means that margins and the opportunity for profitability are higher than other categories, particularly the mass market, where a lower price point is crucial.
Likewise, the brands its sells directly to retail channels include Natural Honey body lotions and Llongueras hair care, as well as operating a multicultural ahir care business under the Crème of Nature brand.