Revlon, known best for its drug store and professional beauty products, is entering the prestige beauty space with the acquisition of Elizabeth Arden.

The news, announced Thursday afternoon, shows that the two New York-based beauty companies signed a definitive agreement under which Revlon will acquire all of the outstanding shares of Elizabeth Arden for $14 per share in cash, representing an enterprise value for Elizabeth Arden of approximately $870 million.

The deal brings Revlon, which has its strength in drug store color cosmetics, hair care, men’s grooming, antiperspirants, deodorants and beauty tools, squarely into department stores with the addition of Elizabeth Arden’s portfolio of licensed prestige fragrances and the global line of Elizabeth Arden-branded prestige skin care, color cosmetics and fragrance products. Revlon’s October 2013 buy of Colomer for $600 million, which included the CND brand, brought it into the professional channel, as well.

Immediate benefits to Revlon include greater scale, an expanded global footprint and a presence across all major beauty channels and categories, including the addition of Elizabeth Arden’s prestige skin care, color cosmetics and fragrances. The combination will leverage Revlon’s scale across major vendors and manufacturing partners, with the aim of improving distribution and procurement. Cost synergies of approximately $140 million are expected to be achieved through the elimination of duplicative activities, leveraging purchasing scale and optimizing the manufacturing and distribution networks of the combined company. The companies anticipate that they will achieve additional growth opportunities in both sales channels and geographies.

Fabian Garcia, President and Chief Executive Officer of Revlon, Inc., said in a statement, “Revlon plans to build upon Elizabeth Arden’s ongoing transformation by further enhancing the brand, with even more vibrant and relevant product development and marketing, while carefully preserving its unique heritage within prestige. Combining our brands, talent, and global distribution will give our company a significant presence in all major channels and categories, while accelerating sales growth in existing and new geographic regions. We look forward to bringing together our two top-notch teams to form a global leader in beauty.”

E. Scott Beattie, Chairman, President and Chief Executive Officer of Elizabeth Arden, said, “We believe this is a compelling transaction that delivers certain value to our shareholders, while recognizing the unique equity in the Elizabeth Arden brand, our impressive fragrance portfolio and global footprint, as well as the positive momentum and growth potential for our business. We look forward to working with the Revlon leadership team to create a leading global beauty company, able to provide accelerated growth for the Elizabeth Arden-branded products as well as our prestige licensed fragrance portfolio, and broader opportunities for many of our employees.”
Moelis & Co. served as Revlon’s advisor in the deal with Arden. 
Bank of America Merrill Lynch and Citigroup Global Markets Inc. have committed approximately $2.6 billion of financing to fund the acquisition and refinance Elizabeth Arden’s existing debt, as well as Revlon’s existing bank term loan and revolving credit facility.

Scott is expected to join Revlon’s Board of Directors as non-executive Vice Chairman. He will also serve as a senior advisor to Fabian to ensure a successful integration and transition. The transaction has been unanimously approved by both Revlon’s and Elizabeth Arden’s Boards of Directors. Rhone Capital LLC, which holds approximately 14 percent of Elizabeth Arden’s outstanding shares of common stock and 20 percent of Elizabeth Arden’s voting interests, and Scott, who holds approximately 4 percent of Elizabeth Arden’s outstanding shares of common stock, have signed voting agreements in support of the transaction. Revlon and Elizabeth Arden expect the transaction, which is subject to approval by Elizabeth Arden’s shareholders and regulatory clearances, as well as the satisfaction of customary closing conditions, to close by the end of 2016.