Description
MacAndrews & Forbes Incorporated is an American diversified holding company wholly owned by billionaire investor Ronald Perelman. Current investments include leading participants across a wide range of industries, from cosmetics and entertainment to biotechnology and military equipment. The principal interests of MacAndrews & Forbes include AM General, Harland Clarke, Merisant, RetailMeNot, Revlon, Scantron, Scientific Games Corporation, SIGA Technologies, Valassis and vTv Therapeutics.
Group
MacAndrews & Forbes & Co. was founded in 1850 by Edward MacAndrews and William Forbes, a distributor of licorice extract and chocolate.
In 1978, Perelman purchased a 40% stake in Cohen-Hatfield Jewelers, and in 1980, Perelman, through Cohen-Hatfield Jewelers, bought MacAndrews & Forbes & Co. Through the purchase, Cohen-Hatfield Jewelers was merged into what became MacAndrews & Forbes Group Inc.
Holdings
In 1983, Perelman formed MacAndrews & Forbes Holdings, Inc. Perelman started selling bonds to acquire the remaining 66% stake in MacAndrews & Forbes Group Inc. to take MacAndrews & Forbes Group Inc. private.
Also in 1983, MacAndrews acquired Technicolor Inc. Despite the bond debt, in 1984, MacAndrews & Forbes purchased Consolidated Cigar Holdings Ltd. from Gulf & Western Industries, in addition to Video Corporation of America The Technicolor Inc. divisions were sold off and, in 1988, its core business was sold to Carlton Communications for 6.5 times the purchase price. Using the proceeds from the Technicolor division sell off, MacAndrews & Forbes purchased a 20 percent stake in Compact Video Inc., a television and film syndication company. Ronald Perelman's controlling buyout of Compact Video was in 1986.
In 1989, Perelman acquired New World Entertainment, with David Charnay's Four Star Television becoming a unit of Ronald Perelman's Compact Video, later that year. Ownership of Compact Video Inc. was increased to 40% in 1989 after the buyout of Four Star International. It was purchased through a golden parachute deal that was negotiated with David Charnay's Acquisition and Ronald Perelman after Charnay was notified of stock purchases made by Perelman in 1989. In 1989, Perelman also acquired New World Entertainment with Four Star becoming a division of New World as part of the transaction. After Compact shut down, its remaining assets, including Four Star International, were folded into MacAndrews & Forbes. By the end of 1989, MacAndrews refinanced the Holding companies' junk bonds for standard bank loans. The bulk of New World's film and home video holdings were sold in January 1990 to Trans-Atlantic Pictures, a newly formed production company founded by a consortium of former New World executives.
Revlon Group
MacAndrews next purchased Pantry Pride Inc., in June 1985. Its three retail supermarket chains were sold off within months.
In 1985, Perelman also took on his biggest deal yet: The Revlon Corporation. Financed with over $700 million in junk bonds from Michael Milken's firm, Drexel Burnham Lambert, Pantry Pride Inc. offered to buy any or all of Revlon's 38.2 million outstanding shares for $47.5 per share when its street price stood at $45 per share. Initially rejected, Perelman repeatedly raised his offer until it reached $53 per share, while fighting Revlon's management every step of the way. Forstmann Little & Company swooped in and offered $56 per share. A brief public bidding war ensued, and Perelman triumphed with an offer of $58 per share. As a result, Perelman paid $1.8 billion to Revlon's shareholders, but he also paid $900 million in other costs associated with the purchase.
After the acquisition, Perelman had Revlon sell four of its divisions: Two were sold for $1 billion, the Vision Care division was sold for $574 million, and, in 1988, the National Health Laboratories division became a publicly owned corporation. Additional makeup lines were purchased for Revlon: Max Factor in 1987 and Betrix in 1989 (they were later sold to Procter & Gamble, in 1991). Despite Perelman's regular cleansing of upper management and injecting millions of dollars into the company, Revlon was unable to turn a profit for several years. As of the first quarter of 2007, it had had one profitable quarter in the previous 32.
By 2012, Revlon was rebounding, and its net income had grown to $51.5 million. As of April 2014, Revlon was trading at $25.45 per share, rising from a low of $1.20 per share in 2007. A major cause of Revlon's financial problems was the debt load stemming from Perelman's purchase of the company.
