Alberto Culver Acquires Regis

Updated from 8:29 a.m. EST

Alberto Culver(ACV) will acquire Regis Corp.(RGS), uniting two beauty care firms via a complex transaction that will preserve Regis' name on the New York Stock Exchange.

Under the deal, Alberto Culver will first spin off its Sally Beauty subsidiary to its shareholders. Sally Beauty will then be merged with Regis Corp. using an exchange ratio that will result in Alberto Culver's shareholders owning 54.5% of the merged company. The combined firm will retain the Regis name and seek clearance for continued listing on the NYSE.

Sally Beauty, which operates about 3,200 stores, is by far Alberto Culver's biggest unit, making up $2.25 billion of its roughly $3.5 billion of annual sales. Regis, which owns Supercuts, also does about $2.25 billion of annual sales.

Shares of both companies rose on the news, with Regis adding $2.22, or 5.6%, to $41.74 and Alberto Culver rising 90 cents, or 1.9%, to $48.88.

In addition to their new Regis stake, Alberto Culver shareholders will collect a one-time dividend of $3 a share. The dividend will be funded through $400 million of debt that will be transferred to Regis when the deal closes.

The beefed-up Regis, whose outstanding share count will expand from about 45 million now to 102 million after the transaction, will more than double its annual dividend, to 36 cents. Alberto Culver's annual dividend will fall from 46 cents to 16 cents.

Once the deal is completed, the combined firm's board will comprise four representatives of Regis, four of Alberto Culver and two independent directors. While Regis shareholders will be the minority owners of the new company, Regis CEO Paul Finkelstein will remain its CEO. Howard Bernick will resign as president and CEO of Alberto-Culver and become non-executive chairman of Regis, while Sally Beauty president Gary Winterhalter will assume that post at Regis.

"The combined company offers powerful distribution capabilities and considerable opportunities for operating efficiencies, both of which will benefit our customers," Regis said in a release. "For our shareholders and associates, combining Regis Corporation and Sally Beauty Company creates a strong company capable of achieving double-digit top and bottom-line growth for many years to come."

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