Physicians Formula Holdings, Inc. (Nasdaq:FACE) ("Physicians
Formula" or the "Company") and Markwins International Corporation
("Markwins") announced today they have entered into a definitive
merger agreement under which Markwins will acquire all of the
outstanding shares of common stock of Physicians Formula for $4.90
per share in cash, or approximately $74.9 million. The per share
price represents a premium of approximately 33% to Physicians
Formula's closing stock price on August 14, 2012 (the trading day
prior to the announcement that Physicians Formula entered into a
merger agreement with affiliates of Swander Pace Capital) and a
premium of approximately 40% to Physicians Formula's one-month
volume-weighted average price as of that same date.
Physicians Formula also announced that, immediately prior to
entering into the merger agreement with Markwins, Physicians
Formula terminated its previously announced merger agreement with
affiliates of Swander Pace Capital—Physicians Formula Superior
Holdings, LLC and Physicians Formula Merger Sub, Inc. In
accordance with the terms of that previous merger agreement,
Physicians Formula is required to pay a termination fee of
$1,285,000 to the affiliates of Swander Pace Capital.
The Physicians Formula's Board of Directors, acting upon the
unanimous recommendation of its Special Committee composed solely
of independent directors, unanimously approved the merger agreement
with Markwins and resolved to recommend that the stockholders of
Physicians Formula vote to adopt that agreement.
Upon the closing of the merger, Physicians Formula will be owned
by Markwins and the employees of Physicians Formula will become
employees of Markwins. At this time, the employees of
Physicians Formula will continue to be located at the company's
existing facilities in Azusa, CA.
"Our Board of Directors, following a thorough analysis by its
Special Committee, has unanimously determined that the proposed
merger with Markwins offers the best value for our stockholders,"
said Ingrid Jackel, Physicians Formula Chairwoman and CEO. "We
are pleased that Markwins has agreed to purchase our company.
Markwins and Physicians Formula sell non-competing brands in
similar channels. Combining the resources and experience of both
companies will strengthen the combined portfolio of brands."
"Following receipt of Markwins' acquisition proposal, the
Special Committee oversaw negotiations with Markwins that resulted
in an increase in the aggregate merger consideration to
stockholders of approximately $10 million, or a 15% increase to the
Swander Pace offer. We believe this all cash sale of
Physicians Formula to Markwins is in the best interests of the
stockholders of Physicians Formula," said Thomas Lynch, Chairman of
the Special Committee.
"The acquisition of Physicians Formula fulfills a strategic
Markwins objective to expand and diversify our already robust brand
portfolio. We believe this is a synergistic acquisition that
creates an immediate opportunity to broaden our consumer base and
enrich our retail partnerships," said Markwins CEO Eric
Chen. "Physicians Formula is widely recognized for its
innovative beauty solutions and loyal customer base which makes it
a natural complement to the ideology of all Markwins brands.
Markwins believes this purchase reflects fair value to current
shareholders, while delivering on the company's expectations of
high-growth and continued global expansion."
The proposed merger with Markwins, which is subject to various
closing conditions including receipt of Physicians Formula
stockholder approval, is expected to close later this year. This
approval will be sought at a special meeting of stockholders. In
connection with the merger, certain stockholders of Physicians
Formula who collectively own approximately 22% of the outstanding
shares of its common stock have entered into voting agreements
pursuant to which they have agreed to, among other things, vote
their shares for the adoption of the Markwins merger agreement,
subject to certain exceptions.
Blackstone Advisory Partners L.P. is serving as exclusive
financial advisor to the Special Committee of the Board of
Directors of Physicians Formula, and has delivered a fairness
opinion in connection with this transaction. Sheppard Mullin
Richter & Hampton LLP is serving as legal advisor to Physicians
Formula in connection with the transaction. The Spartan Group LLC
and Buchalter Nemer, a professional corporation, are serving as
financial and legal advisor, respectively, to Markwins in
connection with the transaction.
About Physicians Formula Holdings, Inc.
Physicians Formula is an innovative cosmetics and skin care
company operating in the mass market prestige, or "masstige,"
market. Under its Physicians Formula brand name, created in 1937,
the Company develops, markets and distributes innovative,
premium-priced products for the mass market channel. Physicians
Formula differentiates itself by addressing skin imperfections
through a problem-solving approach, rather than focusing on
changing fashion trends. Currently, Physicians Formula products are
sold in over 25,000 stores including those operated by Wal-Mart,
Target, CVS and Rite Aid.
About Markwins International Corporation
Based in City of Industry, California, Markwins International
Corporation is a global leader in color cosmetics, cosmetic
accessories and beauty collections. Founded by CEO Eric Chen nearly
30 years ago, the privately-held company is recognized as a top 20
purveyor in the global cosmetic industry. With over 3,000
employees, Markwins brands cater to and reach consumers of all
ages, ethnicities and skin tones. The Markwins brand portfolio
includes wet n wild®, The Color Workshop®, Black Radiance®, The
Color Institute® and POP® amongst many others. As of September
2012, Markwins brands can be found in over 42,000 retail outlets
including Department, Specialty, Mass, Drug and Food stores, and
are available in more than 60 countries, spanning 6 continents.
Additional Information and Where to Find It
Physicians Formula filed with the SEC a preliminary proxy
statement in connection with its previous proposed merger with
affiliates of Swander Pace Capital—Physicians Formula Superior
Holdings, LLC and Physicians Formula Merger Sub, Inc. Physicians
Formula intends to file an amendment to the preliminary proxy
statement and to furnish or file other materials with the SEC in
connection with its agreement to merge with Markwins. The
definitive proxy statement will be sent or given to our
stockholders and will contain important information about the
proposed merger and related matters. Before making any voting
decision, stockholders are urged to read the definitive proxy
statement and those other materials carefully and in their entirety
because they will contain important information about Physicians
Formula and the proposed merger. The proxy statement and other
relevant materials (when they become available), and any other
documents Physicians Formula files with the SEC, may be obtained
free of charge at the SEC's website at http://www.sec.gov. In
addition, security holders will be able to obtain free copies of
the proxy statement from Physicians Formula by directing a request
by mail to Physicians Formula Holdings, Inc., 1055 W. 8th Street,
Azusa, CA 91702, or from the Investor Relations section of
Physicians Formula's website at
http://investor.physiciansformula.com/. The contents of the
websites referenced above are not deemed to be incorporated by
reference into the proxy statement.
Participants in the Solicitation
Physicians Formula and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from
stockholders of Physicians Formula in connection with the proposed
merger. Information about Physicians Formula's directors and
executive officers is set forth in the preliminary proxy statement
filed with the SEC on September 11, 2012. This document is
available free of charge at the SEC's website at www.sec.gov, and
from Physicians Formula by directing a request by mail to
Physicians Formula Holdings, Inc., 1055 W. 8th Street, Azusa, CA
91702, or from the Investor Relations section of Physicians
Formula's website at http://investor.physiciansformula.com/.
Additional information regarding the interests of participants in
the solicitation of proxies in connection with the merger may be
included in the definitive proxy statement that Physicians Formula
intends to file with the SEC.
Safe Harbor Statement
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including, without limitation, statements relating to the
completion of the merger. In some cases, forward-looking
statements can be identified by words such as "anticipates,"
"estimates," "expects," "believes," "plans," "predicts," and
similar terms. These statements are based on current
expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially from those
anticipated as a result of various factors, including: (1) the
Company may be unable to obtain stockholder approval as required
for the merger; (2) conditions to the closing of the merger
may not be satisfied; (3) the merger may involve unexpected
costs, liabilities or delays; (4) the business of the Company
may suffer as a result of uncertainty surrounding the merger;
(5) the outcome of any legal proceedings related to the
merger; (6) the Company may be adversely affected by other
economic, business, and/or competitive factors; (7) the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement;
(8) risks that the merger disrupts current plans and
operations and the potential difficulties in employee retention as
a result of the merger; and (9) other risks to consummation of
the merger, including the risk that the merger will not be
consummated within the expected time period or at all. If the
merger is consummated, stockholders will cease to have any equity
interest in the Company and will have no right to participate in
its earnings and future growth. Additional factors that may
affect the future results of the Company are set forth in its
filings with the SEC, including its Annual Report on Form 10-K for
the year ended December 31, 2011, as amended on Form 10-K/A
filed with the SEC on April 25, 2012, available at
www.physiciansformula.com and the SEC's website at www.sec.gov. You
are urged to consider these factors carefully in evaluating the
forward-looking statements in this release and are cautioned not to
place undue reliance on such forward-looking statements, which are
qualified in their entirety by this cautionary
statement. Unless otherwise required by law, the Company
expressly disclaims any obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
CONTACT: Media Contacts:
For Physicians Formula Holdings, Inc.:
Anne Rakunas
ICR, Inc.
(310) 954-1113
Anne.Rakunas@icrinc.com
For Markwins International Corporation:
For investors: Bill George at bgeorge@markwins.com
For media: Shaila Arora at shaila@arorapr.com
For all other inquiries: Alice Chen at alicechen@markwins.com
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