Revlon Inc shares soared 87% in pre-market trade following ET. According to persons familiar with the situation, Reliance Industries Ltd is considering purchasing the cosmetics behemoth. According to the publication, Reliance Industries, backed by Indian billionaire Mukesh Ambani, is mulling a proposal just days after Revlon filed for Chapter 11 bankruptcy.
The allegation comes after Revlon filed for bankruptcy earlier this week, citing higher raw material costs as a result of global supply chain interruptions, which pushed vendors to seek upfront payments.
As it transitioned away from its main oil sector, Reliance has made forays into fashion and personal care. It has already made inroads into the telecom and retail sectors.
Following years of dwindling sales and financial disagreements, billionaire Ron Perelman’s McAndrews & Forbes-owned Revlon announced Thursday that the pandemic might “disrupt” the reorganization process.
Revlon began producing nail polish in the midst of the Great Depression 90 years ago, and eventually expanded its line to include complimentary lipsticks. The brand had gone global by 1955.
Sales fell 21 percent in 2020, the first year of the pandemic, but recovered 9.2 percent with vaccines in the company’s most recent fiscal year. Revlon sales increased about 8% in the most recent quarter, which ended in March, but they still lag previous epidemic levels by more than $2.4 billion per year.
The worldwide supply chain difficulties that have afflicted hundreds of international corporations in recent months were too much for Revlon, which avoided bankruptcy by convincing bondholders to extend their expiring debt, which was set to mature at the end of 2020.
Following court permission, Revlon intends to get $575 million in financing from its existing lenders, allowing it to continue day-to-day operations.
Debra Perelman, Revlon’s President and CEO nominee in 2018 stated that the filing would allow Revlon to continue to provide iconic products to consumers while giving a clear route for future growth.
Debra’s father, millionaire Ron Perelman, invests in the company through McAndrews and Forbes, which purchased it in a hostile takeover in 1985. In 1996, Revlon went public.
Perelman stated that demand for its products remained high, but the company’s “difficult finance structure” hindered its capacity to maneuver.
The corporation reported assets and liabilities ranging from $1 billion to $10 billion in the bankruptcy petition.