Bloomberg reporter Tara Lachapelle reviews the state of play in the Perfumania (PERF) takeover of Parlux Fragrances (PARL). Since the announcement on December 23, 2011, Perfumania’s stock has declined by roughly 50%, while Parlux shares have risen to just under the offer price. To Lachapelle, this means investors believe Parlux may not be able to come up with the $15 million cash on hand required by the terms of the deal.
And what a remarkable deal it is:
At 42 times Parlux’s earnings before interest, taxes, depreciation and amortization, the takeover is the most expensive for any acquisition in the cosmetics and toiletries industry greater than $100 million. The 140 percent premium is also the industry’s richest since 1999, the data show. The transaction, valued at about $131 million yesterday, is now greater than Perfumania’s own market capitalization of $92.4 million, according to data compiled by Bloomberg.Parlux reports its earnings in the week ending February 10. So that’s when we’ll learn whether the company has amassed enough additional cash for the deal to go through.