Ronald Perelman

Corporate raiders with billion-dollar war chests and the affinity for deal-making are taking on an increasing presence in the news of the day, but few have moved up the takeover ladder as quickly and as aggressively as Ronald Perelman, chairman of Revlon, one of the world's best-known cosmetic firms. The cigar-smoking Perelman, who would prefer to remain unrecognized, inconspicuous, and generally forgotten about, has fought a losing battle in his efforts to remain out of the public spotlight. And buying Revlon in 1985 for $1.8 billion in cash quickly pushed him into the ranks of the nation's foremost takeover giants, with the likes of T. Boone Pickens and Carl Icahn. Headline-making was suddenly the province of a man who insists he is just "an operations guy." But despite his protestations of modesty, Perelman has earned a reputation as a hard-bargaining investor who is tenacious in his quest for new companies. The pillows in his office sum up the story. One reads, "Love me, love my cigar." The other, "No guts, no glory."

In recent years, Perelman, whose net worth is estimated by Fortune magazine at $300 million, has made three nearly simultaneous bids to acquire giant companies: Transworld, a hotel chain and food vendor; food processor CPC International; and Gillette, the razor and toiletries company. His strategy is to buy a company and then keep only those parts of the operation that are particularly attractive to him. His practice of stripping off operations and streamlining what he considers to be overdiversified companies has won him the title of the Wall Street Stripper. In slimming down companies, he gets back much of what he spent to acquire it, and he is left with a leaner, more profitable business that he is interested in running. Perelman's critics say he is a greenmailer because of the money he pockets from making passes at companies; for example, he reaped a $94 million profit from his unsuccessful 1986 bid for CPC International, according to Fortune. Perelman maintains, however, that he is interested in companies to purchase them, and not to make money on their stock. One high-ranking executive who was involved in a deal with Perelman described him in New York magazine as "an opportunist...in the nicest sense." In 1984, Perelman purchased Consolidated Cigar for $124 million from Gulf + Western. And Martin Davis, chairman of Gulf + Western, told New York that Perelman is "astute enough to know what will work and what won't."

Perelman's management finesse first began to take shape when he was growing up in Philadelphia as the first of two sons in an upper-class family. His father, Raymond Perelman, owns Belmont Industries, a metal-fabricating firm. As early as elementary school, the younger Perelman had his first brushes with business while sitting in on board meetings of his father's company. He attended the Haverford School outside of Philadelphia and then enrolled in the University of Pennsylvania, where he received a B.A. in economics. He later received an MBA from the Wharton School of Finance. For 12 years, he apprenticed with his father's business, learning the art of buying, selling, and running companies. For example, Fortune magazine reported, Perelman sold a galvanizing firm and a shoe manufacturer, then purchased a small, financially troubled bank that he brought back to life and resold. Perelman's father told Fortune magazine that his son provided input in many of the elder's corporate purchasing decisions. "When Ronnie was a boy, whenever I was thinking of making an acquisition, we would drive out to look at the company and discuss the pluses and minuses together," the elder Perelman recalled.

Ronald Perelman left the family business in 1978, and that same year took the advice of a business broker and purchased for $2 million about 40 percent of a jewelry retailer and distributor. The company, Cohen-Hatfield Industries, proved to be the project on which Perelman would cut his teeth. He sold off most of the company's assets, retaining the reliable and profitable wholesale watch distribution business. By selling off the assets that were not performing as Perelman wanted, he was able to use the company as a shell to purchase other companies. In two years, he used Cohen-Hatfield to purchase MacAndrews & Forbes, a troubled company that supplied licorice extract and chocolate. By finding new sources of licorice in areas more stable than world licorice suppliers Iran and Afghanistan, Perelman was able to turn a faltering company into a profitable business. Then MacAndrews---once the object of an acquisition---was in turn able to provide the cash flow Perelman needed to finance other buys, such as the $105 million purchase in 1983 of Technicolor---the company that gives vivid color to many Hollywood films. At the time, nobody wanted to buy Technicolor, although it had been on the market for years. But with typical style, Perelman sold off five divisions of the company and has turned Technicolor into a winner. He also purchased Consolidated Cigar and a videocassette duplicator named Video Corporation of America.

Perelman's run at Revlon began through his 1985 purchase of a controlling interest in Pantry Pride, a Florida-based chain of supermarkets. He purchased the supermarket chain for $60 million, but at the time, Perelman was not trying to buy Revlon, New York magazine reported. Pantry Pride, however, wanted to buy Revlon. The beauty company, once the nation's leading maker of cosmetics under founder Charles Revson, had faded over the years in the face of stiff competition from other beauty companies and waning enthusiasm from department stores, who had lost a good deal of interest in stocking the product line. Said one industry consultant in 1987 in Fortune: "Revlon was the No. 1 cosmetic in any store no matter how you measured it. Now it's not even a good No. 3 in the mass-market outlets like drugstores, and it's getting slaughtered in department stores."

Supermarket chain Pantry Pride provided the cash that Perelman needed to purchase Revlon. By selling off the grocery chain's assets, Perelman was able to gather together much of the $1.8 billion he needed to buy Revlon's outstanding shares. But it was not an easy purchase. A takeover fight ensued, during which Perelman announced that he would keep Revlon's cosmetic business but rid the company of other divisions, including those that sold such products as Tums and hospital diagnostic aids, New York magazine reported. To fight Perelman, Revlon announced that its management would take the company private and give chairman Michel Bergerac continued control. But after considerable court battles that went all the way to the Delaware Supreme Court, Perelman won his bid for the cosmetics firm. His next challenge was to turn it around.

After 20 months of owning Revlon, Perelman took the company private in July 1987, vowing to return it to its former prominence on the department store beauty aisles. The company faces weighty competition from high-priced brands such as Estee Lauder as well as drugstore brands like Cover Girl. Both Noxell and Maybelline lead Revlon at drug and discount stores. Department stores, whose cosmetics buyers had discontinued buying Revlon products, once relegated the center aisles to other brands, leaving Revlon behind. But through Perelman's efforts, department stores are giving the brand a second chance. After becoming chairman of Revlon in 1986, Perelman went knocking on the doors of department store heads, trying to persuade them to give Revlon the exposure it once had. Since those visits, the number of department stores carrying Revlon products rose by 1,000 in one year, Fortune reported. In Bloomingdale's prestigious Manhattan store, Revlon now can be found in the main aisle. Bloomingdale's chairman Marvin Traub told Fortune: "Revlon is becoming a strong competitor in department stores."

Perelman's makeover of Revlon doesn't stop at department stores. He spent $500 million to purchase Max Factor and the cosmetics and fragrance lines of Yves Saint Laurent. He also directed that Revlon lipsticks and nail enamels be reformulated and discarded old packaging in favor of upscale bottles and boxes targeted at the well-heeled department store shopper. To gloss up the company's image, Perelman hired famed beauty photographer Richard Avedon. The photographer heated up magazine pages with print ads of seductive women and the tag line, "The world's most unforgettable women wear Revlon."

Most of all, Perelman wants the Revlon name to once again be synonymous with the beauty business---an area he feels it strayed much too far away from. On his third day at Revlon, he discovered a bronze head of founder Revson gathering dust in a closet and quickly restored it to a prominent post in Revlon's New York City offices. "Charles Revson not only founded this company, he founded the beauty industry." Perelman told Fortune. "He had to have been a fantastic individual, and he deserves recognition. Prior management tried to hide his involvement." Perelman added in New York magazine that he has established a pattern for acquiring companies that he intends to follow. "I think we've defined a strategy of seeking out companies with certain basic common characteristics," Perelman said. "They're all basic cash-flow generators, where the cash flow is free from fad, fashion or styles. We won't look at fashion companies. We won't look at retailing chains like Macy's. We won't look at anything that's high-tech oriented or fad-oriented."

Perelman's personal life has been nearly as colorful as his acquisitions. His first marriage to Faith Golding---a member of a wealthy New York City real estate family---fell apart after she learned Perelman was having an affair with a local florist. Golding sued for divorce on grounds of adultery and hired private detectives to trail the couple. Details of the detectives' observations were listed in an affadavit in the divorce filing, including secret breakfasts between Perelman and the florist. New York magazine reported that Golding discovered the affair when the bill for an expensive Bulgari bracelet arrived at their home---a bracelet that was not for Golding. After a messy divorce, Perelman's relationship with the florist ended.

In January 1984, he met entertainment reporter and former gossip columnist Claudia Cohen. One year to the day after they were introduced, Perelman and Cohen were married, and the two held a reception several months later at the trendy Palladium nightclub in Manhattan. Entertainment was by the Pointer Sisters, and scores of prominent guests including Elizabeth Taylor attended the event. But despite all the glitz that has surrounded him, Perelman insists he is a private person. He is a member of the Orthodox Fifth Avenue Synagogue, and in keeping with strict Jewish tradition, does not work on Saturday. While Perelman is tight-mouthed about his plans for the future, many speculate that another multimillion dollar acquisition will soon catch his eye. Perelman, 46, replied in Fortune: "I'm still a young man. We'll see."