Physicians Formula Holdings, a cosmetics and skin care company, and Swander Pace Capital have entered into an agreement under which Swander Pace will acquire Physicians Formula for $65 million. “We are pleased that Swander Pace has agreed to purchase our company. The firm has a record of success in acquiring and operating companies in the consumer space, and we believe they will add value to our business as we continue to successfully execute our growth initiative,” said Ingrid Jackel, Physicians Formula Chairwoman and CEO.
Physicians Formula is a cosmetics and skin care company operating in the mass market prestige, or “masstige,” market. Under its Physicians Formula brand name, created in 1937, the company develops, markets and distributes premium-priced products for the mass market channel. Physicians Formula products are sold in over 25,000 stores including those operated by Wal-Mart, Target, CVS and Rite Aid. The company was founded in 1937 and is based in Azusa, CA (www.physiciansformula.com).
Under the terms of the agreement, Swander Pace will acquire all outstanding shares of the common stock of Physicians Formula (NASDAQ:FACE) for $4.25 per share in cash, or approximately $65 million. The per share price represents a premium of approximately 15% over Physicians Formula’s closing stock price on August 14, 2012. The Physicians Formula’s Board of Directors has approved the agreement.
Swander Pace Capital invests in middle-market consumer products companies including branded and non-branded, manufacturers, marketers, and distributors that sell through a range of retail and institutional channels. The firm generally targets companies up to $300 million in revenues. Swander Pace manages over $1 billion in equity capital and has offices in San Francisco, CA and Bedminster, NJ (www.spcap.com).
“The acquisition of Physicians Formula reinforces Swander Pace’s investment focus on lower middle-market consumer products industry companies,” said Mo Stout, a Swander Pace Managing Director. “Physicians Formula is a pioneer in the cosmetics industry, and we are committed to working with its management team on this next stage of growth and innovation for the company.”
Blackstone Advisory Partners delivered a fairness opinion in connection with this transaction. Sheppard Mullin Richter & Hampton is serving as legal advisor to Physicians Formula and Kirkland & Ellis provided legal counsel to Swander Pace in connection with the transaction.