Procter & Gamble deal may affect Noxell

April 11, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- Procter & Gamble's agreement yesterday to buy Revlon's Max Factor and Betrix cosmetics companies for $1.14 billion could have major implications for Hunt Valley-based Noxell Corp., acquired by Procter & Gamble only 18 months ago.

Procter & Gamble has already made several shifts in Noxell's businesses, including transferring to its Cincinnati headquarters responsibility for both Lestoil, a household cleaner, and the international operations for Noxell's cosmetics business. Bigger changes may follow.

Earlier this year, Procter & Gamble completed reviews of its operations by product categories, said Allan Mottus, an industry consultant.

With the addition of Max Factor, the conglomerate may be leaning toward a major reshuffling, he said.

Makeup, Mr. Mottus speculated, could be consolidated with Noxell in Hunt Valley; skin care -- including Noxell's core Noxzema brand -- in Connecticut with the Richardson-Vicks operations acquired in 1985; and fragrances in Cincinnati.

Revlon Inc. makes several lines of cosmetics, including the Revlon brand, but Max Factor's senior management and most of its sales force operated independently of the parent company. Manufacturing, however, was done jointly at plants in New Jersey and Arizona.

James Conroy, special counsel and vice president for public affairs at Revlon, said the Max Factor sales agreement maintains this manufacturing arrangement for a short period while "extensive co-mingling" of Revlon and Max Factor operations are sorted out.

Equipment used in making Max Factor products was included in the sale, and Brenda Lee Landry, an analyst with Morgan Stanley & Co., predicted Procter & Gamble will soon merge Noxell's and Max Factor's production, if not other operations, with Maryland the most likely location.

The impact on Max Factor's and Noxell's employees is unknown.

Max Factor employees 4,500 people worldwide, many at its Los Angeles headquarters, and Noxell has 1,800 employees, 1,400 in Hunt Valley. Other than informing Max Factor employees of the acquisition, no details of the transaction were provided.

"Our first step is to learn about [the] business and how it is managed," Kelly Gillespie, a Procter & Gamble spokeswoman, said. "Naturally, there will some changes in management over time, and we will be looking for synergies in operations."

While Max Factor's $600 million in annual sales is reckoned by several analysts to be slightly larger than that of Noxell and both cater to the mass market through drugstores and cosmetic outlets, the composition of their business is different.

Noxell's main lines are Cover Girl and Clarion.

About 75 percent of Max Factor's revenues, and all of Betrix's $200 million in annual sales, is overseas. Betrix was Revlon's German subsidiary.

The most recent figures for Noxell, issued shortly before the Procter & Gamble acquisition, indicated that more than 80 percent of its $522 million in sales were domestic.

That will likely play a critical role in whether the deal, which joins two of the largest cosmetics companies, survives antitrust scrutiny by the U.S. Justice Department.

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