Ilia Lekach, chairman and chief executive officer of the Miami-based Perfumania, said, "On a personal basis, I was not happy with the Wall Street reaction [to the proposed merger]."
He noted that Perfumania stock has declined since the Dec. 9 merger announcement and that there has been a lack of enthusiasm on Wall Street for the deal. On Dec. 10, Perfumania stock closed at 7 1/8 over the counter, but by the close of Tuesday's trading, it had fallen to 4 3/8, down 1/8.
"In the final analysis, Revlon wants Perfumania's retail," Lekach said, adding that Revlon can acquire the retail operation by buying Perfumania's stores and inventories for cash. Lekach said the negotiations are for the retail business and the Perfumania name.
A spokesman for Revlon said the company had been interested in all of Perfumania's business but now is interested solely in the retail division, including all 148 stores and inventories. He added that in the terminated agreement, the intent was to merge, with Perfumania being the surviving entity, but that will not necessarily be the outcome of a new deal.
Emphasizing that the discussions are in a preliminary stage, the spokesman would not give a time frame for an agreement and did not disclose terms. Revlon has previously said a merger of its outlets into Perfumania would allow greater focus on the Revlon's core cosmetics and beauty care divisions.
Jerry Levin, Revlon president, said the objective remains the same, but the company has decided on a more circuitous route. He said the Perfumania and Revlon units would be put together in one retail operation and the company would then be taken private. "Over time, we would probably reduce our interest," he said.
Lekach said the current talks do not include Perfumania's wholesale operation. If the sale of the retail business goes through, Lekach said, Perfumania would probably have to change the name of the wholesale business.