Elizabeth Arden Shares Gain 14.42% On Takeover Bid Rumors, Analyst Comments

Shares of Elizabeth Arden RDEN have traded as high as 14.42 percent on a rumored unconfirmed takeover bid by Korean LG Household & Healthcare. On April 22, Reuters reported that LG household is considering a bid for Elizabeth Arden. Following the company's earnings report on May 12, Arden announced that it has hired Goldman Sachs to explore options. The 8-K filing stated that "it has engaged Goldman, Sachs & Co. to assist the Board of Directors in exploring potential strategic alternatives to enhance shareholder value and to accelerate the growth and maximize the value of its brand portfolio. There can be no assurance that the Company will pursue any strategic alternatives, whether its review will result in any transaction being entered into or consummated or what the form or terms and conditions of any such strategic alternative may be." A month later, Oppenheimer remarked that Elizabeth Arden has less than a 50 percent chance of being acquired. Following a disappointing third quarter, the analyst sees a base-case takeover value of $32.00 per share. Oppenheimer advised investors to avoid the stock. On Wednesday, June 11, BMO analyst Constance Maneaty commented on the speculated deal. Maneaty wrote that dealReporter's speculated price of $1.48 billion values the deal at 18.6x EV/EBITDA on a TTM basis. The analyst noted that Elizabeth Arden's current evaluation is at 12.5x EV/EBITDA on a TTM basis, which is in-line with the average TTM take-out valuation for cosmetic companies. BMO calls Arden's current share price, a "rich" valuation given the company's "lack of earnings visibility" and challenges it faces. Shares of Elizabeth Arden closed at $25.04 on Tuesday. The stock is currently trading at $28.65, up 14.42 percent.