To any CUSA followers - any thoughts on the press release today? Does this bode well or ill for the co.? Thinking back to Max's original analysis of CUSA, does the sale of the contract packaging business make sense? Any thoughts to who the buyers are? Curious to hear others' thoughts.
For what it's worth, the stock was down 7/16 today on the news, losing almost 25% of its market cap.
Here's the press release:
Monday June 2 9:28 AM EDT
Company Press Release
Cosmetic Group U.S.A. Inc. announces an agreement in principle to sell its contract packaging business
LOS ANGELES--(BUSINESS WIRE)--June 2, 1997--Cosmetic Group U.S.A. Inc. (NASDAQ:CUSA) announced that it has entered into an agreement in principle with CGUSA LLC (a newly formed limited liability company which is an unaffiliated privately owned entity), for the sale of the assets and business of its contract packaging business.
As part of the transaction, the buyer will also be purchasing up to 500,000 shares of Cosmetic Group common stock. The total consideration will approximate $9,250,000 in cash and notes plus certain liabilities of the business which the buyer will assume. In addition, the buyer will enter into a consulting agreement and covenant not to compete with Alfred E. Booth Jr. and Judith Zegarelli, who are officers, directors and principal shareholders of Cosmetic Group.
The transaction will result in a gain for Cosmetic Group. Closing of the transaction is subject to the execution of a mutually acceptable definitive agreement, regulatory approval, the approval of Cosmetic Group's board of directors and shareholders and the completion of due diligence by both parties. The transaction is expected to take place in the third quarter of 1997.
Alfred E. Booth Jr., chief executive officer of Cosmetic Group stated: ``The sale of the contract packaging business will allow us to concentrate our efforts on the expansion of the Zegarelli line of professional hair care products and the development of additional products for the professional salon industry. The increased distribution both domestically and internationally of the Zegarelli product line continues to give us confidence that we will be able to make this brand an important member of the professional industry.''
Booth further stated that ``Upon completion of the announced transaction, the company will continue to have the strong financial capability to expand the business. The new owner of the contract packaging business is expected to continue as the manufacturer of the Zegarelli line and our agreement with them will provide incentives to our company as purchases increase.''
Contact:
Cosmetic Group U.S.A. Inc.
Alfred E. Booth Jr./Jennifer Eggers, 818/767-2889 |
