The deal will see Swander Pace buy up all the outstanding shares in the business under a definitive merger agreement, which at $4.24 per common stock share values the company at approximately $65m.
Swander Pace said that the acquisition price represented a premium of approximately 15 percent on the closing price of the company’s shares before the deal was formalized.
Investment world reacts positively to the deal
The investment world took positively to the announcement, with shares on the New York Stock Exchange rising by approximately 13 percent at the close of business yesterday.
Physcians Formula was established by Dr. Frank Crandall in 1937 and will continue to be run by the company’s existing management team, while maintaining the business in Azusa, California, as well as holding on the current employees.
Speaking of the new owner, Physicians Formula chairwoman and CEO Ingrid Jackel said: “The firm has a record of success in acquiring and operating companies in the consumer space, and we believe they will add value to our business growth initiatives.”
Swander adds to growing personal care portfolio
The Swander Pace Capital portfolio includes food, beverage, food ingredients and household product companies, together with a personal care portfolio that includes hotel and hospitality cosmetics supplier Gilchrist & Soames and Insight Pharmaceuticals.
"The acquisition of Physicians Formula reinforces Swander Pace's investment focus on lower middle-market consumer products industry companies," said Mo Stout, a Swander Pace Managing Director.
"Physicians Formula is a pioneer in the cosmetics industry, and we are committed to working with its management team on this next stage of growth and innovation for the company."
The transaction will be subject to market regulatory practices and closing conditions as well as being subject to voting rights by a number of shareholders who have significant shareholder interest in the business, but is expected to be completed towards the end of this year.