Pantry Pride Inc., a Fort Lauderdale, Fla.-based operator of supermarkets and other stores, increased the bidding for Revlon Inc. yesterday by offering $56.25 a share, or about $1.78 billion in cash.
Last Thursday, Revlon said it had agreed to be acquired by certain members of management and New York investors for $56 a share in a leveraged buyout. Pantry Pride, which had been offering $53 a share for Revlon, charged yesterday that Revlon Chairman Michel C. Bergerac would receive more than $20 million under his employment agreement as a result of the buyout approved last week.
"In light of Mr. Bergerac's repeated refusal to negotiate with Pantry Pride, the proposed leveraged buyout reinforces our belief that his actions are motivated more by self-interest than by the best interests of Revlon's stockholders," Pantry Pride Chairman Ronald O. Perelman said yesterday. "We believe all Revlon stockholders should be concerned about the propriety of Mr. Bergerac's role."
Pantry Pride also said yesterday that it was filing an amended complaint in its lawsuit against Revlon, alleging that Revlon's board of directors breached its fiduciary duties in approving the buyout last week. Pantry Pride said it is seeking to block special payments to Bergerac, and a $25 million payment by Revlon to Forstmann Little & Co., a New York investment firm participating in the buyout, if the deal is not completed.
Revlon, a Fifth Avenue-based cosmetics and health-care company, has been fighting Pantry Pride's hostile takeover attempt since August. Although the company said yesterday that its directors had not yet met to consider the latest Pantry Pride offer, one Revlon official was critical of it.
"It is another typical, highly conditional Pantry Pride proposal, which makes me wonder how shareholders can take them seriously," Revlon Vice President Roger Shelley said yesterday. "There has been a yo-yo effect on their offers," Shelley said, referring to the series of offers from Pantry Pride since August that have gone from $47.50 a share to $42 to $53 and now to $56.50.
Among the conditions that Pantry Pride stipulated yesterday in its latest bid were that Revlon eliminate certain "poison pill" antitakeover provisions and restrictive covenants on some of its outstanding debt.
Another important condition is Pantry Pride's ability to raise $600 million to complete the acquisition. Pantry Pride has about $750 million in cash and a bank commitment for $450 million. The company has retained the investment banking firm of Drexel Burnham Lambert Inc. to raise the other $600 million through the private placement of securities known as junk bonds.
In the leveraged buyout approved by Revlon last week, the company would be acquired by management and outside investors with a combination of borrowed money, a $445 million investment by Forstmann Little and proceeds from the sale of certain Revlon subsidiaries.
A group including Revlon Chairman Bergerac and and Forstmann Little would purchase most of Revlon's health-care business while a separate investor group led by Adler & Shaykin, a New York firm specializing in buyouts, has agreed to acquire Revlon's worldwide beauty-products business for about $900 million. The sale of the beauty-products business to Adler & Shaykin is expected to be completed prior to the acquisition of Revlon by Forstmann Little and is not subject to shareholder approval, Revlon said last week. As part of the buyout approved last week, American Home Products Corp. would buy Revlon's Norcliff Thayer and Reheis Chemical businesses, marketers of such well-known over-the-counter products as Tums stomach antacid tablets.