Alberto-Culver CEO Bernick To Retire Following Sally Spin-Off
This article was originally published in The Rose Sheet
Executive Summary
Alberto-Culver President and CEO Howard Bernick will retire after nearly 30 years at the company following its planned spin-off of the Sally Beauty business this spring, the firm announced Jan. 10
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Alberto-Culver President and CEO Howard Bernick will retire after nearly 30 years at the company following its planned spin-off of the Sally Beauty business this spring, the firm announced Jan. 10. Bernick will become non-executive chairman of the board of Regis Corporation, a beauty salon company that will merge with Sally Beauty Company in a $2.6 bil. deal, pending shareholder approval, according to the firms. The merger will combine Sally Beauty Company's 2,419 Sally Beauty stores, 822 Beauty Systems Group outlets and 1,244-person direct sales force with Regis' 10,952 beauty salons, 90 hair restoration centers and 35 beauty education schools, the companies said. Bernick will be replaced at the helm of Alberto by current President, Consumer Products Worldwide Jim Marino. Carol Lavin Bernick will continue in her role as chairman of the board. The management change marks the end of a long and successful tenure for Bernick, whose name has become synonymous with Alberto. Bernick joined Alberto in 1977, and became president in 1988. He added CEO to his title in 1994, succeeding his father-in-law and Alberto co-founder Leonard Lavin (1 (Also see "ALBERTO-CULVER PRESIDENT/COO HOWARD BERNICK ADDING TITLE OF CEO" - HBW Insight, 31 Oct, 1994.), p. 3). Under his leadership, the firm has significantly grown its consumer products business, which includes the Alberto VO5 , Tresemme and St. Ives brands. The $40 mil. Nexxus brand was added to the lineup last year (2 (Also see "Marketing In Brief" - HBW Insight, 16 May, 2005.), Marketing In Brief). In 2000, the division's sales were around $850 mil.-$900 mil. Following the spin-off of Sally this year, revenues of the business will be around $1.4 bil. Additionally, the firm's stock price has more than doubled in value since 2000. The decision to split the consumer products division from Sally Beauty Company has been under consideration for some time, the company noted. The move positions Alberto as an attractive takeover target for a larger consumer products firm. According to Alberto, both divisions have "matured into strong, independent businesses, each generating handsome revenue, earnings and cash flow and having strong growth potential." "By separating the companies, we have better positioned them to execute their business strategies and compete more effectively," the firm added. Following the Sally divestiture, Alberto-Culver will be "financially solid, have strong cash flows, and focused 100% on the company's branded consumer products business," Alberto said. Alberto will continue to seek "strategic, accretive consumer products acquisitions," Bernick added during a Jan. 10 analyst call on the deal. The rest of the operating team will remain in place, he noted. For Sally's Beauty Systems Group, the spin-off and merger will help it compete more effectively in the beauty service arena. "It would have taken us decades and decades to get sufficient scale in the service salon arena competing against Regis, trying to buy the same companies they're buying, vying for the same real estate," Bernick said. "This allows us overnight, by merging Sally BSG into Regis, to become the number one player on both fronts." Sally Beauty in its most recent fiscal year had sales of $2.25 bil. Regis expects the combined company to have sales of $7 bil.-$8 bil. within five years. The transaction also provides both Sally and Regis more international expansion opportunities, and allows Sally Beauty Company to pursue more "aggressive" marketing and advertising, according to Regis CEO Paul Finkelstein, who will oversee the new entity. Prior to completion of the merger, Sally Beauty will assume $400 mil. in debt from Alberto. Under terms of the agreement, Alberto-Culver stockholders can receive .6 Regis shares for each of the Alberto shares they own. Therefore, Alberto shareholders will own approximately 54.5% of the shares in the combined company. The transaction will be tax-free to Alberto and its shareholders, the firm noted. The merger is expected to close by summer. - Eileen Francis |