Alberto-Culver Co. Inc. (Melrose Park, Ill., USA) announced plans to sell its Sally Beauty Co. retail chain to beauty salon operator Regis Corp. (Minneapolis, Minn., USA). Sally Beauty, a retailer of professional beauty supplies, will be spun off to its shareholders and then combined with Regis Corp., according to reports. The arrangement will leave Alberto-Culver with its consumer products business, which includes hair care brands Alberto VO5, St. Ives, TRESemme and Nexxus.
The company reportedly said that separating the businesses help it to focus its efforts 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, as reported by AP.
Alberto-Culver reported approximately US$3.5 billion in sales in 2005. 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 approximatey US$2.25 billion in fiscal 2005.
According to reports, each Sally Beauty share will be converted into the right to receive 0.6 newly issued shares of Regis. This arrangement will give Alberto-Culver shareholders nearly 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 transaction is expected to be completed in late spring or early summer 2005.