NEW YORK (TheStreet) -- Shares of Elizabeth Arden (RDEN) are surging 47.53% to $13.73 on heavy trading volume Friday morning after Revlon (REV) said it would buy the Miramar, FL-based company in an $870 million deal.
New York-based Revlon will pay $14 per share in cash for the beauty products company, a premium of about 50% to Elizabeth Arden's closing price of $9.31 on Thursday.
The acquisition will strengthen Revlon's skincare and fragrance business and expand its global footprint in markets such as the Asia-Pacific region.
The equity value of the deal is $419 million, based on Elizabeth Arden's outstanding shares as of May 3.
The combined company will generate annual sales of about $3 billion. The agreement will also help Revlon refinance its heavy debt load, the Wall Street Journal noted.
The acquisition comes six months after controlling shareholder and Chairman Ronald Perelman said he was exploring strategic alternatives for Revlon.
The deal is expected to close by the end of the year.
About 25.7 million of Elizabeth Arden's shares were traded so far today vs. its average volume of 84,003 shares per day.
Shares of Revlon are climbing 7.83% to $33.59 on Friday morning.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on Elizabeth Arden stock.
The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: RDEN