CD&R glams up with 3.4x cosmetics exit

Under CD&R’s ownership, Sally Beauty grew revenues by 49% and EBITDA by 101%.

Clayton Dubilier & Rice has sold its remaining stake in Sally Beauty, an NYSE-listed beauty and cosmetic retailer, the firm said in a statement.

The investment produced a 3.4x return multiple and 26 percent IRR, according to a source familiar with the matter. The firm was unavailable for comment at press time.

CD&R invested $571 million to acquire roughly a 48 percent stake in the company in a 2006 transaction in which Sally Beauty was spun off from listed consumer products business The Alberto-Culver Company. CD&R began exiting Sally Beauty, which remained a public company under the firm’s ownership, in October 2011, and subsequently sold its remaining shares in the business via three additional offerings in February, May and July of 2012. CD&R generated total proceeds of $1.9 billion following the completion of the final offering. 

“Sally Beauty involved the complex carve-out of a non-core distribution business,” CD&R partner Richard Schnall said in a statement. “The company’s strong performance during our ownership was underpinned by solid execution of key operational improvement initiatives, including increasing custome traffic, expanding fross margins and growing the business internationally.”

Under CD&R’s ownership, Sally Beauty grew revenues by 49 percent and grew earnings before interest, tax, depreciation and amortisation by 101 percent. International revenues, meanwhile, grew by 128 percent.

CD&R invested in the company from its Fund VII, which closed on $4 billion in 2005. The firm is currently investing its $5 billion Fund VIII, closed in 2009.