Alberto-Culver Co. shares rose while those of hair salon chain Regis Corp. fell, one day after the two companies abandoned a plan to merge Alberto-Culver assets with Regis. According to reports, shares of Alberto-Culver rose US$1.14, or 2.6%, to US$45.25 on the New York Stock Exchange. In return, shares in Regis dropped 28 cents to US$33.72.
After the April 5, 2006, close, Alberto-Culver reportedly said its board decided not to proceed with an earlier agreement to merge its Sally Beauty and Beauty Systems Group business with Regis after it failed to extract better terms. Alberto-Culver, maker of products like Alberto V05 shampoo and St. Ives Swiss Formula lotion, cited two profit warnings from Regis, significant changes to Regis' forecasts, uncertain financial outlook and differences in management for terminating the deal, according to a report by AP.
Separately, Regis reportedly said Alberto-Culver was required to pay a termination fee due to the aborted merger agreement. Regis, one of the largest hair salon operators, did not disclose the size of the cancellation fee it was seeking, but analysts reported it was $50 million. According to AP, looking ahead, the most likely scenario for Alberto-Culver would be a spin-off for the beauty supply business, since it has already stated that channel conflicts are too deep for it to remain connected to its consumer products unit. Consequently, a sale of the consumer products unit could follow.