L'Oreal leads Benckiser in battle for Maybelline

Drug Store News, Feb 12, 1996

NEW YORK -- At press time, it looks as if L'Oreal will be the winner in a bidding war to acquire Memphis-based Maybelline, barring any intervention from the U.S. Justice Department.

But an outside chance remains that L'Oreal's rival for Maybelline, John A. Benckiser of Germany, may still be able to get back in the running if the Federal Trade Commission adopts a position sympathetic to Benckiser.

After undergoing five days of intense counter bidding with Paris-based L'Oreal S.A. pitted against Benckiser, Maybelline's board of directors on Jan. 21, 1996, recommended that shareholders approve L'Oreal's bid of $44 a share.

Still in the running

However, Benckiser, which decided not to top L'Oreal's bid at that point, still seems to be pursuing the company.

At press time, Maybelline reported that it received a notice from Benckiser stating that the estate of Albert Reimann, the owner of Benckiser Cosmetics Holding Inc., is seeking approval from the Federal Trade Commission to acquire at least $15 million and more than 50 percent of Maybelline's common shares.

Maybelline filed the notice with the Securities and Exchange Company last week.

A source for Benckiser said the company is still under a confidentiality agreement and can't comment on the filing, but she added that the filing "does not change the circumstances or the intent of our previous statement."

After Maybelline recommended that its shareholders accept the L'Oreal bid, a Benckiser spokesman said they would "continue to review the situation, especially in the event that the U.S. Department of Justice opposes L'Oreal's acquisition of Maybelline."

Benckiser seems to be gambling that the Justice Department will ultimately withhold its approval of the merger because of L'Oreal's ownership of the L'Oreal mass market cosmetics line and the Lancome department store cosmetic line.

A combination of L'Oreal and Maybelline would make L'Oreal the No. 2 cosmetics manufacturer in the U.S., just one share point behind P&G which owns Cover Girl and Max Factor cosmetics.

The government is expected to respond to the promised merger sometime on or around Feb. 1.

L'Oreal's latest bid means Maybelline would be acquired for $611 million in cash and $150 million in acquired debt. The bid is $26.7 million more than Benckiser's last bid and about $100 million higher than L'Oreal's original bid.