By  on June 30, 2008

PARIS — The Courtin-Clarins family is expected to announce an 842.8 million euro, or $1.33 billion at current exchange, offer today to take Groupe Clarins private — and the financial community is generally giving the move a thumbs-up.

The family will hold a press conference here this morning to reveal plans to buy out the beauty company's minority shareholders, according to a filing Friday with the Autorité des Marchés Financiers, France's stock market watchdog.

"It's a fair price," said Matthieu Bordeaux-Groult, an analyst at Richilieu Finance in Paris.

"I don't think it's a bad price in terms of market conditions," agreed Eva Quiroga, an analyst at UBS in London, referring to Clarins' stock value, which has dropped about 23 percent since the beginning of this year. "The whole sector has lost a lot in terms of market capital."

The price Clarins plans to pay represents about a 29 percent premium to where the stock closed early Thursday afternoon, when — as reported — the company suspended its trading. The share price at that point was 43.72 euros, or $68.83, up 1.67 percent versus Wednesday's close.

Analysts say the key upside to Clarins going private is that it gives the firm freedom to do what it pleases, such as upping its advertising budget and launching innovative yet risky cutting-edge concepts, without having to answer to anyone — neither shareholders nor the market.

Financière FC, the Courtin-Clarins family holding company, on Friday morning filed a tender offer with the AMF, proposing to pay 55.50 euros, or $87.39, for each of the 15.19 million shares publicly held. (This represents 37.3 percent of Clarins' capital.)

Financière FC also called the press conference in Paris for today at 9 a.m. "on the occasion of the operation initiated by the Courtin family," which, as of Dec. 31, 2007, owned 64.9 percent of Clarins' capital and 78.5 percent of its voting rights.

Many industry observers laud Clarins' tender offer and its subsequent opportunity to go private.

"It's a big luxury to be private because then you're not depending on the fluctuations of the market. You don't have to grow to please the market, can manage your company at your own pace and don't have to give explanations," said Karine Ohana, partner in Ohana & Co., a boutique M&A firm in Paris. "That's the ultimate target for many people. Some companies have lost a lot by having their shares go down.""I can see why it's doing it," said one analyst that requested anonymity. "In its mind, the market has been giving them a hard time. The vision they have had has always been the right one. As a private company, they'd be able to realize that more easily."

"The two most important things for Clarins are its brands' innovation and quality, and those will clearly be at the center of development for the family-owned company," said Bordeaux-Groult. "You really see a different strategy when a company is owned by a family."

If the Courtin-Clarins clan takes Clarins back, they could be likened to the Ferragamos, Wertheimers or Puigs, said Ohana, referring to other dynasties with private companies.

"Then you can have a really long-term strategy," she said. "You don't always need to think short-term to please the market."

Meanwhile, speculation still swirls about what Clarins' approach will be looking ahead.

"I'm wondering if someone hasn't taken a stake in its business on a friendly basis," said the analyst that asked not to be identified, who added it's even possible the firm might itself be in an acquisitive mood. "Clarins could announce a small acquisition of its own."

"Maybe they will find something in the U.S., which is still a problem [market]," said Bordeaux-Groult, referring to the fact that 64.4 percent of the company's revenues are generated in Europe.

However, no acquisition is expected to bulk Clarins up to the point where it could compete effectively against the likes of L'Oréal and Procter & Gamble, many agree.

"Unless someone with deep pockets comes in, you have to ask yourself, 'What has changed?'" said the analyst. "You're still small and still probably struggling to fight against the big guys."

— Jennifer Weil

De La Renta Files Suit Against Arden

Oscar de la Renta Ltd. filed suit in Manhattan federal court on Friday, accusing Elizabeth Arden Inc. of trademark infringement and false designation of origin for the alleged repackaging and sale of Oscar de la Renta fragrances.According to the complaint, in late 2007 Elizabeth Arden repackaged and sold 4-ml. Oscar de la Renta fragrance samples, originally intended as free gifts or samples for customers upon the purchase of other Oscar de la Renta products. The samples, never intended for commercial sale, were distributed at Wal-Mart stores under the name "EA Fragrances Co." in packaging designed to simulate the trade dress of approved Oscar de la Renta fragrance products, the lawsuit alleged.

Court papers said that, to date, Elizabeth Arden has not ceased the sale or distribution of the samples and that some time after Jan. 28, renamed the infringing product "Designer Fragrance Collectible." Its new label reads, "This genuine Oscar product has been repackaged in the U.S. by EA Fragrances, Co., New York, NY 10003, a company not affiliated with Oscar de la Renta Ltd." The suit says that the product's sale may involve retailers in addition to Wal-Mart.

Oscar de la Renta is seeking a permanent injunction from further distribution of the product by Elizabeth Arden, legal fees and any further relief deemed just by the court.

A representative from Elizabeth Arden could not be reached for comment.

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