Revlon's Purchase Of Elizabeth Arden Likely To Raise Company's Debt Level And Hurt Rating, Analysts Say

Revlon's $419-million acquisition of beauty company Elizabeth Arden Inc. would take as many as five years before generating enough cost savings to keep the company's debt levels low enough to avoid a junk rating, according to analysts at Bloomberg Intelligence and Gimme Credit. Also, credit investors funding the purchase deal are likely to demand higher returns for their exposure to compensate for the risk that proposed cost-cutting moves will not run smoothly. Revlon said its business plan for the acquisition will cut debt on its balance sheet, and that it aims to ensure a seamless integration of the two companies and “full realization” of the projected savings from such a combination.