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Dwindling share price forces reverse split from Revlon

In a bid to attract institutional investors and boost its flagging stock price, cosmetics company Revlon has approved a reverse split of the company's Class A and Class B common stock at a 1:10 split ratio.

Institutional money has shunned the stock as sub-par results and a dwindling share price have fallen well below the criteria set by many investors. The reverse split is scheduled for May or June and shareholders will receive one share for every 10 they hold, increasing the price 10-fold.

"We believe that a reverse stock split is in the best interest of our stockholders because we expect it will allow our stock to be more attractive to a broader range of institutional and other investors," said Revlon president and CEO David Kennedy.

Currently, Revlon patriarch and chairman Ronald O Perelman (pictured) owns about 58% of Revlon's Class A common stock and 60% of Revlon's combined shares of Class A and Class B common stock, through various vehicles. This represents close to 74% of the combined voting power of Revlon's Class A and Class B shares. Perelman, son of entrepreneur Raymond Perelman, bought the company in 1985.

SunTrust Robinson Humphrey analyst Bill Chappell said: "The company is not out of the woods in terms of a turnaround, but this represents steps in the right direction. We do believe the change will attract more institutional interest."

The company filed first quarter results today showing net sales of approximately $320 million, compared to $328.6 million in the first quarter of 2007. Operating income increased to $30 million from $3 million last year and net losses narrowed to $5 million, compared to $35.2 million.