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MacAndrews & Forbes

From Alfawiki
MacAndrews & Forbes Incorporated
Company typePrivate
IndustryDiversified holding company
Founded1850
FounderEdward MacAndrews, William Forbes
Headquarters
New York City
,
United States
Area served
Worldwide
Key people
Ronald Perelman (Chairman and CEO)
ProductsCosmetics, entertainment, biotechnology, defense equipment, financial services
OwnerRonald Perelman

MacAndrews & Forbes Incorporated is a U.S.-based diversified holding enterprise fully controlled by billionaire investor Ronald Perelman. Its business interests cover a wide range of sectors such as cosmetics, entertainment, biotechnology, and defense equipment. Prominent subsidiaries within its portfolio include AM General, Harland Clarke, Merisant, RetailMeNot, Revlon, Scantron Corporation, Scientific Games Corporation, SIGA Technologies, Valassis, and vTv Therapeutics.

Guided by Perelman’s direction as Chairman and CEO, MacAndrews & Forbes has established a significant market footprint by pursuing acquisitions and investments that strengthen its competitive positioning across varied industries. The company’s main office is located in New York City, with operational activities conducted through numerous subsidiaries delivering products and services that span from beauty care to military technology.

Origins

MacAndrews & Forbes & Co. was created in 1850 by Edward MacAndrews and William Forbes, initially focusing on the distribution of licorice extract and chocolate products.

In 1978, Ronald Perelman acquired a 40% ownership in Cohen-Hatfield Jewelers and two years later, utilized this entity to purchase MacAndrews & Forbes & Co., subsequently merging Cohen-Hatfield into the newly formed MacAndrews & Forbes Group Inc.

Corporate Holdings

Perelman founded MacAndrews & Forbes Holdings, Inc. in 1983, issuing bonds to finance the acquisition of the remaining 66% of MacAndrews & Forbes Group Inc., thereby taking the company private.

That same year, the firm acquired Technicolor Inc. Despite carrying bond-related debt, it proceeded in 1984 to purchase Consolidated Cigar Holdings Ltd. from Gulf & Western Industries along with Video Corporation of America. The Technicolor segments were later divested; the core business was sold in 1988 to Carlton Communications for 6.5 times the original acquisition cost. The capital raised was invested in acquiring a 20% interest in Compact Video Inc., a company specializing in television and film syndication; Perelman took full control by 1986.

In 1989, expansion continued with the purchase of New World Entertainment and the integration of David Charnay’s Four Star Television into Compact Video. Following the Four Star acquisition, ownership of Compact Video increased to 40%. This deal included a golden parachute arrangement negotiated after Perelman’s stock purchases that year. Four Star became a division under New World as part of this agreement.

Following Compact Video’s dissolution, its assets—including Four Star International—were absorbed into MacAndrews & Forbes. By late 1989, the company replaced its junk bond financing with traditional bank loans. In January 1990, most film and home video assets of New World were sold to Trans-Atlantic Pictures, a newly established production firm created by former New World executives.

Revlon Division

In June 1985, MacAndrews acquired Pantry Pride Inc., promptly selling off its three supermarket chains.

That same year marked Perelman’s notable purchase of the Revlon Corporation, financed largely through over $700 million in junk bonds arranged by Michael Milken’s Drexel Burnham Lambert for a total price of $1.8 billion. Pantry Pride Inc. launched a hostile takeover bid for Revlon's 38.2 million shares and ultimately prevailed in a bidding contest by offering $58 per share, outbidding Forstmann Little & Company’s $56 per share offer. The transaction also involved an additional $900 million in associated expenses.

After acquiring Revlon, Perelman streamlined its operations by divesting four divisions—two for $1 billion combined and the Vision Care unit for $574 million—and took National Health Laboratories public in 1988. He expanded Revlon’s cosmetics portfolio through acquisitions such as Max Factor in 1987 and Betrix in 1989; however, these brands were later sold to Procter & Gamble in 1991. Despite frequent leadership changes and significant capital infusions, Revlon faced ongoing financial difficulties, reporting only one profitable quarter out of 32 through early 2007.

By 2012, Revlon demonstrated signs of financial improvement with net earnings reaching $51.5 million. As of April 2014, its stock price had risen to $25.45 from a low point of $1.20 in 2007. The company’s extended financial struggles were primarily attributed to the heavy indebtedness resulting from Perelman’s leveraged buyout.

This acquisition remains an important example of corporate restructuring and strategic management within the beauty industry sector.

Gillette, Four Star, and the Late 1980s Private Equity Landscape

In 1986, MacAndrews & Forbes, under Ronald Perelman's leadership, pursued several takeover bids for the Gillette Company, proposing offers as high as $5.7 billion before withdrawing in 1987. The following year, after divesting Consolidated Cigar, takeover attempts shifted focus to CPC International. In 1986, Perelman acquired Compact Video and later secured Four Star International in 1989 through a golden parachute arrangement, subsequently integrating Four Star into MacAndrews & Forbes following Compact Video’s shutdown. By 1989, the company restructured its holding companies’ high-yield bonds by refinancing with conventional bank loans.

Savings and Loan Sector Involvement

Perelman entered the Savings & Loan crisis arena in 1988 by purchasing five failed thrifts with combined assets of $12.2 billion and $5.1 billion in federal assistance for $315 million, merging them into First Gibraltar. His restructuring plan included reducing payroll expenses, divesting branches, and shedding $2.5 billion in non-performing assets. Expansion continued in 1990 with acquisitions of San Antonio Savings Association and Sooner Federal, which brought additional assets and government cash infusions. Sooner Federal was sold in 1992; subsequently, First Gibraltar was sold to BankAmerica for $110 million while retaining four branches rebranded as First Madison. It is estimated that Perelman’s earnings from these transactions ranged from $600 million to $1.2 billion, primarily through tax benefits.

In 1994, Perelman made a major reentry into the sector by acquiring First Nationwide from Ford Motor Company for $664 million. Ford retained $1.8 billion of troubled assets and provided loss protection guarantees. He bolstered First Nationwide’s portfolio by purchasing $10 billion in mortgages from the Resolution Trust Corporation for $175 million and later acquired assets from SFFed and Home Federal Financial’s deposits. Concurrently, he divested branches outside California by selling 79 branches with deposits totaling $4.3 billion across five states in 1995.

Perelman’s acquisition of California Federal Bancorp in 1996 for $1.2 billion resulted in the formation of the fourth-largest thrift institution with assets amounting to $32.3 billion. A stock exchange agreement with Golden State Bancorp in 1998 created the third-largest thrift holding $50 billion in assets; despite Golden State shareholders holding majority equity, Perelman retained control. In 2002, Citigroup purchased Golden State for roughly $4.9 billion after revising its initial offer due to a decline in stock value. Perelman’s holdings were converted into cash and Citigroup shares valued near $2 billion; however, prior divestitures likely diminished his total profits.

Andrews Group Developments

Andrews Group, Inc., formed from Compact Video’s corporate shell, acquired Marvel Entertainment Group, Inc. in 1989 along with its former parent company New World Entertainment, Inc.

That year Andrews Group reported a loss of $14.8 million and had a negative net worth of $10 million; MacAndrews & Forbes held a 57% stake. Marvel Entertainment Group went public in 1991 by offering 30% of its shares to outside investors.

Significant acquisitions included:

  • Fleer – September 1992
  • Toy Biz, Inc. – Acquired a 46% stake – 1993
  • SCI Television – Acquired a 54% stake – 1993
  • Genesis Entertainment – Acquired a 50% stake (part of New World Entertainment)

In May 1994, New World expanded its media footprint by purchasing eight television stations for over $1 billion from Great American Communications and Argyle Television Holdings. These strategic acquisitions positioned New World as a major force during the television industry reshuffling that followed Fox Broadcasting Company securing NFL broadcasting rights in 1994. Eventually, Rupert Murdoch acquired full ownership of New World Communications for $3 billion, generating substantial returns for Perelman.

Meridian Sports Holdings

In 1989, MacAndrews & Forbes purchased The Coleman Company, Inc., a prominent producer of camping and outdoor recreation products, for $545 million. Perelman then refocused Coleman’s operations by selling off its heating and air-conditioning units, concentrating instead on camping gear and marine-related businesses. From 1993 through 1995, he enhanced Coleman’s portfolio by acquiring seven additional companies.

By the end of 1997, seeing limited expansion opportunities within Coleman’s primary brand, Perelman engaged in negotiations with Al Dunlap of Sunbeam Products to divest his interest. In March 1998, he sold his entire 82% ownership stake in Coleman to Dunlap for $1.5 billion in cash plus $680 million in Sunbeam shares.

Although the transaction closed amid deteriorating sales projections for Sunbeam and a sharp decline in its stock price—from $54 down to $24 per share—Perelman took control of Sunbeam with plans to revive the company. Nevertheless, Sunbeam filed for bankruptcy within three years, highlighting the difficulties inherent in managing troubled assets.

Morgan Stanley

On February 17, 2005, Perelman initiated legal action against Morgan Stanley, accusing the firm of misleading him about problems related to Sunbeam. During the discovery phase, the presiding judge criticized Morgan Stanley for obstructive behavior and instructed the jury to infer intentional fraud against Perelman. Morgan Stanley countered by asserting that Perelman’s extensive experience made deception unlikely. After a five-week trial, the jury awarded Perelman $1.45 billion—a substantial verdict given Morgan Stanley had previously declined a $20 million settlement proposal.

Morgan Stanley appealed the judgment, challenging the application of Florida law instead of New York law and contesting the judge’s pretrial instructions to the jury. In 2007, appellate courts overturned the verdict on grounds that Perelman failed to demonstrate actual damages. The Florida Supreme Court unanimously dismissed his appeal. Despite these setbacks, Perelman attempted to reopen the case by alleging withheld email evidence constituted fraud on the court; however, this motion was denied by the trial court. As of January 2009, he was petitioning Florida’s 4th Circuit Court to reconsider.

This prominent litigation underscores the complexities involved in corporate lawsuits and risk management faced by financial institutions such as Morgan Stanley, affecting both their reputation and financial standing.

SPAC

In 2007, Perelman established a Special Purpose Acquisition Company (SPAC) called MAFS Acquisition under MacAndrews & Forbes Holdings. The SPAC sought to raise funds by offering 50 million units at $10 each, with Citigroup serving as underwriter for its initial public offering. However, in December 2008, MAFS retracted its IPO filing, citing concerns related to investor protection.

Current

By 2019, MacAndrews & Forbes’ holdings comprised:

Former Holdings

See also

External links

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