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M&A Pitch Book Project – Global

Revlon M&A Pitch Book

Project Background

The buy-side M&A case pitch book is written to propose the acquisition of Revlon,Inc. by Unilever. Through the acquisition, we seek to create and diversify international distribution channels in Asia, increase sales by increasing production volume through the procurement of production plants, lower cost of sales by realizing synergies and cost reductions and secure strong brand positioning in the market.

  • Part 1. Investment Highlight Overview
  • Part 2. Target Overview -Revlon
  • Part 3. Transaction Overview: Unilever & Revlon
  • Part 4. Market Overview/ Analysis: China
  • Part 5. Market Overview/ Analysis: India

Project Leaders

Park, Sang jeong

Junior Finance Analyst,
FCB Finance Institute

Concentration Area: M&A Advisory

Ahn, Jee min

M&A Project Certify
FCB Finance Institute

Concentration Area: M&A Advisory

Hyun, Yu jeong

M&A Project Certify
FCB Finance Institute

Concentration Area: M&A Advisory

Lee, Jae hyun

M&A Project Certify
FCB Finance Institute

Concentration Area: M&A Advisory

Finance Project Portfolio

Part 1.  Investment Highlight Overview

The selling price of Revlon is $2.03B. In Revlon’s restructuring plan, expenses are very much front-end weighted but revenues and saving/benefits are back-end weighted. Last year, Elizabeth Arden’s net sales grew by 115.79% internationally. Through the acquisition of Revlon, it’s fair to conclude that it could create international network distribution through utilizing Revlon’s strong and positive brand image within the Asian markets. As of the declining sales of Revlon, professional and other segments and it would be best to make sure to sell partial liquidation of the most loss department or production line.

An original design manufacturer (ODM) is a company which designs and manufactures a product which is specified and eventually branded by another firm for sale. Such companies allow the brand firm to produce (either as a supplement or solely) without having to engage in the organization or running of a factory.

Part 2.  Target Company Overview -Revlon

The target company Revlon is a firm headquartered in New York that is currently run under Ronald Perelman. Revlon’s products can be segmented into 6 categories: Cosmetics(31%), fragrance(28%), hair care(10%), skin care(10%), personal care(7%) and nail products(6%). It was first established by Brohteres Charlers and Joseph Revson in 1932. Starting with a $12 per share in 1995, it developed at a fast rate, increasing its IPO at $30 per share in only 8 weeks. In 2016, it managed to successfully complete its acquisition of its rival company, Elizabeth Arden, at $870M. The next year, it also succeeded in investing $16.1M for its Granvile Country plant in North Carolina which increased Elizabeth Arden’ production capacity. Now, after the CEO Fabian Garcia left, Debar Perelman was named as the new CEO.

Part 3.  Transaction Overview – Unilever & Revlon

Unilever could utilize Elizabeth Arden’s newly invested production plants in North Carolina as a way to strengthen its strong production capacity. It can also capitalize in Revlon’s strong brand and marketing presence in India and China. Moreover, couple with Unilever’s strong presence in the Asian market, an increase in production volume will increase revenue and reduce costs in the long run.

Part 4.  Market Overview: China

The GMV of Chinese online cosmetic market grew from 38.4 in 2011 to 276.5 in 2018. Elizabeth Arden collaborated with Chinese Skincare Influencers and it has partnered with the China Duty Free Group, CNSC and Zhuhai Duty Free. Likewise, Elizabeth Arden is increasing its market share in China. Through the acquisition of Revlon, Unilever can step into the premium beauty segment and further its market share in Asia due to Elizabeth Arden’s strong presence in South Korea and China.

Part 5.  Market Overview/ Analysis –India

Currently, the Indian cosmetic market is segmented into 5 categories: Skin Care, Oral Care, Hair Care, Fragrance and Cosmetic Colors. Revlon had already settled as the market leader in two of these categories: Skin Care and Color Cosmetics. Within the Color Cosmetics category, Revlon holds the second most market share of 14%. As one of the first international cosmetics brand to have been launched in India, Revlon has constructed a strong and positive brand image in India. Therefore, since Revlon has already established a strong market share within the Indian market, the acquisition of Revlon may be great opportunity for Unilever to not only easily segue into the Indian market, but also increase its sales revenue in the long run as well.

Part 6.  Valuation

After the acquisition of Carver Korea, Unilever’s sales revenue, that had been declining for the last three years, increased by 1.90%. Its EV/EBITA also increased by 15.23% as well. Through observing the increase of these values from a similar acquisition, it’s fair to conclude that the acquisition of Revlon could also potentially yield positive synergies for Unilever as well.

The average growth rate for EV/EBITA and sales revenue were all references from the following sources:

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