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Alberto-Culver Company Announces $2.6 Billion Agreement

Alberto-Culver Company announced the $2.6 billion agreement to spin-off Sally Beauty Company and merge it with Regis Corporation. The agreement will combine Sally Beauty Company’s Sally Beauty stores, Beauty Systems Group outlets and direct sales force with Regis’ beauty salons, hair restoration centers and beauty education schools. Sally generated revenues of $2.25 billion and pre-tax operating earnings of $224 million in the fiscal year ended September 30, 2005.


Following the transaction, Alberto-Culver will be a $1.4 billion in annual sales global branded consumer products company.

“Our Consumer Products group and Sally Beauty Company have both matured into strong, independent businesses, each generating handsome revenue, earnings and cash flow and having strong growth potential,” said Carol L. Bernick, chairman of the board, Alberto-Culver Company. “By separating the companies, we have better positioned them to execute their business strategies and compete more effectively. We believe this transaction will provide strong benefits for the shareholders of both Alberto-Culver and Regis Corporation.”

Under the terms of the agreement, Alberto-Culver Company shareholders, in addition to retaining their current Alberto-Culver shareholdings, will receive 0.6 shares of Regis Corporation in respect of each share of Alberto-Culver Company they own. At closing, Regis Corporation will have approximately 102 million diluted shares outstanding, and Alberto-Culver Company shareholders will own approximately 54.5% of the shares in the combined company. The spin/merge transaction is intended to be tax-free to Alberto-Culver and its shareholders.

Prior to completion of the merger, Sally will borrow $400 million, which it will distribute to Alberto-Culver Company. Alberto-Culver Company will use approximately $280 million of the proceeds after the closing of the merger to pay a $3 per share special one-time cash dividend to Alberto-Culver Company shareholders. In addition, Alberto-Culver’s annual cash dividend is expected to be 16 cents per share in conjunction with the Alberto-Culver share price adjustment. Regis’ annual cash dividend is expected to be increased 125% to 36 cents per share from its current annual payout of 16 cents per share.