Alberto-Culver spins off beauty supplies unit for combo with Regis | VailDaily.com
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Alberto-Culver spins off beauty supplies unit for combo with Regis

CHICAGO – Hair care firm Alberto-Culver Co. is getting a makeover, announcing plans Tuesday to spin off its beauty supplies business.The company said its Sally Beauty Co. business, the world’s biggest seller of professional beauty supplies, will be spun off to its shareholders and then combined with Regis Corp., the No. 1 hair salon operator.The announcement sent shares in Minneapolis-based Regis up sharply while signaling a new focus for 50-year-old Alberto-Culver, which is based in the Chicago suburb of Melrose Park, Ill.The deal will leave Alberto-Culver with its consumer products business, which includes hair care brands Alberto VO5, St. Ives, TRESemme and Nexxus. It said separating the businesses would let it better compete and operate more effectively.”Spinning off the Sally division is a dramatic change in strategy for Alberto-Culver and will leave it operating solely as a consumer products manufacturer,” said Morningstar Inc. analyst Lauren DeSanto in a note to investors.Alberto-Culver had about $3.5 billion in sales in 2005, leaving it just outside the Fortune 500 list of largest U.S. companies.Regis, which operates nearly 11,000 salons under the names Supercuts, Jean Louis David and Vidal Sassoon, said the combination with Sally Beauty would give it strong distribution capabilities and operating efficiencies. Sally Beauty, which operates a network of about 3,200 stores and a direct sales force of 1,200, generated revenue of about $2.25 billion in fiscal 2005.Alberto-Culver shares fell $1.49, or 3.1 percent, to $46.49 in afternoon trading on the New York Stock Exchange, while Regis shares gained $3.96, or 10 percent, to $43.48.Each Sally Beauty share will be converted into the right to receive 0.6 newly issued shares of Regis. That will give Alberto-Culver shareholders about 54.5 percent of the expanded Regis, which will retain Minneapolis as its corporate base and Paul D. Finkelstein as its chairman and chief executive.The combined company would also assume $400 million in debt from the former Alberto-Culver business.Regis said it would raise its annual dividend to 36 cents from 16 cents once the deal is closed.The transaction is expected to be completed in late spring or early summer this year, pending shareholder approval of both companies, antitrust clearance and other conditions. The boards of directors of both sides have voted to approve the proposed deal.—On the Net: http://www.alberto.comVail, Colorado


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