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Clayton, Dubilier & Rice makes $1.9bn from Sally Beauty sale

24 Jul 2012

US private equity firm Clayton, Dubilier & Rice has realised $1.9bn from its 2006 investment in international retailer Sally Beauty Holdings.

Including a secondary offering, CD&R sold all of their 86 million Sally common shares in four underwritten offerings in October 2011, February 2012, May 2012 and July 2012, and a share repurchase by Sally in May 2012, at an average price of $22.68.

Under CD&R’s ownership, revenues and EBITDA for Sally increased 49 per cent and 101 per cent, respectively, while margins expanded 430 basis points, the firm said.

In November 2006, CD&R invested $571m to acquire approximately 47.5 per cent of Sally Beauty, valued at $6.66 per share, from The Alberto-Culver Company in an leveraged spin-off transaction.

All remaining shares were spun off to then-current Alberto-Culver shareholders. Post-initial investment, CD&R became the largest single shareholder.

CD&R partners Richard Schnall and Kenneth Giuriceo served as directors of Sally Beauty, and CD&R operating partner James G Berges served as chairman.

“Sally Beauty involved the complex carve-out of a non-core distribution business,” said Schnall.

“The company’s strong performance during our ownership was underpinned by solid execution of key operational improvement initiatives, including increasing customer traffic, expanding gross margins and growing the business internationally.”

Giuriceo added, “We are very proud of our association with Sally Beauty and wish the very talented management team continued success as it continues to drive earnings through a combination of top line growth and efficiency initiatives.”

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