Perelman Begins Unwinding Multibillion Dollar Empire With Sale
(Bloomberg) -- Ronald Perelman, the billionaire looking to rework his MacAndrews & Forbes investment empire, is selling his majority stake in Humvee maker AM General.
The move to sell the auto manufacturer, one of Perelman’s largest assets, marks the start of what could be a significant shakeup for his vast holdings, which span cosmetics, military vehicles, pharmaceuticals and business services.
Private equity firm KPS Capital Partners said Wednesday that it signed an agreement to acquire AM General for an undisclosed amount. The South Bend, Indiana-based company has built in excess of 1 million vehicles in the past 100 years and over 300,000 automotive systems in more than 70 countries, according to its website.
Perelman, the 77-year-old chairman of Revlon Inc., is looking to rearrange his holdings as the pandemic has pinched corporate profits and upended strategies at his companies, many of which have high debt burdens from leveraged buyouts.
Josh Vlasto, a spokesman for MacAndrews & Forbes, said last week that Perelman is looking at options including the divestment of certain assets “due to changes in the world both socially and economically.” The move “will allow us to be opportunistic and flexible in looking at new situations,” according to a statement.
Perelman said last week he’s also exploring selling his shares in Scientific Games Corp. And he plans to offload two modern paintings by Joan Miro and Henri Matisse for as much as 42 million pounds ($53.5 million) at a Sotheby’s auction this month, Bloomberg reported on Tuesday.
Perelman bought a stake in AM General in 2004 for an undisclosed amount in a joint venture with fellow billionaire Ira Rennert’s Renco Group Inc. The Humvee first saw action in the 1991 Gulf War. It developed a cult following after Arnold Schwarzenegger persuaded AM General to sell a consumer model, the Hummer, beginning in 1992. General Motors Corp. acquired the Hummer brand name in 2000.
Perelman’s 70% stake in AM General was worth an estimated $1.2 billion, according to a Bloomberg analysis that valued the company by using its reported 2018 earnings and the price-to-earnings ratio of public competitor Oshkosh Corp. KPS Capital declined to comment on the price paid.
Perelman and Rennert have been in a legal battle for years over the Humvee maker. A Delaware judge last month described the AM General agreement as “perhaps the most intensely contested contract in the history of litigation.”
A Renco spokesperson didn’t immediately return a phone call seeking comment, while MacAndrews & Forbes’s Vlasto declined to comment beyond his earlier statement.
Perelman’s fortune has tumbled by more than half since early 2018 to $8 billion, making him the 78th-wealthiest person in the U.S., according to the Bloomberg Billionaire Index.
Revlon, which Perelman acquired in a 1985, has struggled with falling sales and competition from Estee Lauder Cos. and a host of smaller companies that use social media to gain market power. Perelman’s daughter, Debra Perelman, took over as Revlon’s chief executive officer in 2018.
In early May, soon after the outbreak of the coronavirus pandemic, Revlon undertook a $1.8 debt deal to preserve liquidity. The company’s market value has tumbled to less than $400 million from $2.9 billion in 1998.
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