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Revlon Inc. shares surged as much as 87% in pre-market trading after ET Now, citing people familiar with the matter, reported that Reliance Industries Ltd. is considering buying the cosmetics giant. Reliance Industries, controlled by Indian billionaire Mukesh Ambani, is mulling an offer just days after Revlon filed for Chapter 11 bankruptcy, the publication reported.

The report comes as Revlon filed for bankruptcy earlier this week after global supply chain disruptions drove up raw material costs and prompted vendors to demand upfront payments.

Reliance has pushed its way into the fashion and personal care space in recent months as it diversifies away from its mainstay oil business. It has already established a foothold in telecom and retail sectors.

Revlon, owned by billionaire Ron Perelman’s MacAndrews & Forbes, suffered during the pandemic after years of declining sales and endured financial controversies that the company said Thursday could “impede" its restructuring process. 

Revlon got its start 90 years ago selling nail polishes in the throes of the Great Depression, and later added coordinated lipsticks to its collection. By 1955, the brand was international. 

Sales dropped 21% in 2020, the first year of the pandemic, though they rebounded 9.2% in the company's most recent reporting year with vaccines widespread. In the latest quarter that ended in March, Revlon's sales rose nearly 8%, but still lag pre-pandemic levels in excess of $2.4 billion a year.

The global supply chain disruptions that are hobbling hundreds of international companies in recent months were too much for Revlon, which barely escaped bankruptcy in late 2020 by persuading bondholders to extend its maturing debt.

Revlon said Thursday that upon court approval, it expects to receive $575 million in financing from its existing lenders, which will allow it to keep its day-to-day operations running.

“Today's filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth," said Debra Perelman, who was named Revlon president and CEO in 2018.

Her father, billionaire Ron Perelman, backs the company through MacAndrews & Forbes, which acquired the business through a hostile takeover in 1985. Revlon went public in 1996.

Perelman said that demand for its products remains strong, but its “challenging capital structure" offered limited ability to navigate.

The company listed assets and liabilities between $1 billion and $10 billion, according to its bankruptcy filing.

 

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