– Regis Increases Equity Ownership in Provalliance to 46 Percent -
Regis Corporation (NYSE: RGS), the global leader in the $160 billion
hair care industry, today announced that it has agreed to increase its
ownership stake in Provalliance, the largest hair salon company in
Europe.
Under the terms of the agreement, Regis will pay approximately $56.0
million to secure an additional 17 percent ownership interest, bringing
its total equity position in Provalliance to 46 percent. The transaction
is expected to close prior to June 30, 2011, and is projected to add
approximately six cents to earnings per share on a full year basis. The
transaction results from Regis' acceptance of a previously-disclosed
equity put right held by one of the other investors in Provalliance.
Provalliance, which operates salons primarily under the brands of Jean
Louis David, Franck Provost and Saint Algue is led by its founder and
Chairman, Franck Provost, and Marc Aublet, President. Founded in 1975,
Provalliance currently owns or franchises approximately 2,500 hair
salons in 33 countries with annual revenues of over $275 million and
system-wide sales exceeding $1 billion.
"We are extremely excited to expand our ownership interest in
Provalliance," commented Paul D. Finkelstein, Chairman and Chief
Executive Officer. "We originally partnered with Franck Provost in
January, 2008 and we are very satisfied with the execution of the
business plan we jointly developed. The Provalliance business model is
proven and the management team is established and experienced. The
business is primarily franchised and has high margins and low capital
investment requirements. Their brand recognition and profitability has
been enhanced through their strong partnerships with the world's largest
professional product companies."
Mr. Finkelstein concluded, "With only a four-percent market share in
North America, Regis remains committed to growing our business
domestically. However, there are also significant expansion
opportunities internationally, and we do not want to miss out on those
opportunities. By increasing our ownership in Provalliance, we have the
platform to participate in international growth, thereby further
solidifying our position as the world's largest operator of hair salons."
When the transaction is completed, Regis expects to recognize a
non-cash, non-operational gain of approximately $1.0 to $3.0 million
representing the settlement of an existing equity put liability related
to Provalliance. Additionally, Regis will continue to account for the
investment in Provalliance under the equity method of accounting.
About Regis Corporation
Regis Corporation (NYSE:RGS) is the beauty industry's global leader in
beauty salons, hair restoration centers and cosmetology education. As of
December 31, 2010, the Company owned, franchised or held ownership
interests in over 12,700 worldwide locations. Regis' corporate and
franchised locations operate under concepts such as Supercuts, Sassoon
Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4
Kids and Hair Club for Men and Women. In addition, Regis maintains an
ownership interest in Provalliance, which operates salons primarily in
Europe, under the brands of Jean Louis David, Franck Provost and Saint
Algue. Regis also maintains ownership interests in Empire Education
Group and the MY Style concepts in Japan. System-wide, these and other
concepts are located in the U.S. and in over 30 other countries in North
America, South America, Europe, Africa and Asia. For additional
information about the company, including a reconciliation of non-GAAP
financial information and certain supplemental financial information,
please visit the Investor Information section of the corporate website
at www.regiscorp.com.
To join Regis Corporation's email alert list, click on this link:
http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1 This press release contains "forward-looking statements" within the
meaning of the federal securities laws, including statements concerning
anticipated future events and expectations that are not historical
facts. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. The forward–looking statements in this document reflect
management's best judgment at the time they are made, but all such
statements are subject to numerous risks and uncertainties, which could
cause actual results to differ materially from those expressed in or
implied by the statements herein. Such forward-looking statements are
often identified herein by use of words including, but not limited to,
"may," "believe," "project," "forecast," "expect," "estimate,"
"anticipate" and "plan." In addition, the following factors could affect
the Company's actual results and cause such results to differ materially
from those expressed in forward-looking statements.These factors
include the results and impact of the Company's announcement to explore
strategic alternatives; competition within the personal hair care
industry, which remains strong, both domestically and internationally;
price sensitivity; changes in economic conditions, and in particular,
continued weakness in the U.S. and global economies; changes in consumer
tastes and fashion trends; the ability of the Company to implement its
planned spending and cost reduction plan and to continue to maintain
compliance with the financial covenants in its credit agreements; labor
and benefit costs; legal claims; risk inherent to international
development (including currency fluctuations); the continued ability of
the Company and its franchisees to obtain suitable locations and
financing for new salon development and to maintain satisfactory
relationships with landlords and other licensors with respect to
existing locations; governmental initiatives such as minimum wage rates,
taxes and possible franchise legislation; the ability of the Company to
successfully identify, acquire and integrate salons that support its
growth objectives; the ability of the Company to maintain satisfactory
relationships with suppliers; or other factors not listed above.The
ability of the Company to meet its expected revenue target is dependent
on salon acquisitions, new salon construction and same-store sales
increases, all of which are affected by many of the aforementioned
risks. Additional information concerning potential factors that could
affect future financial results is set forth in the Company's Annual
Report on Form 10-K for the year ended June 30, 2010. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
However, your attention is directed to any further disclosures made in
our subsequent annual and periodic reports filed or furnished with the
SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A. 
Regis Corporation Mark Fosland – Vice President, Finance,
952-806-1707
|