Shares of Revlon (NYSE:REV), which filed for bankruptcy earlier this week, are soaring 75% in pre-market trading. REV stock is jumping after ET Now reported India-based Reliance Industries is interested in acquiring Revlon. ET based its report on information from unnamed sources.
A very well-known U.S.-based seller of cosmetics, “Revlon’s financial results have been undermined this year by its heavy debt and supply chain issues,” as I noted in an article yesterday.
Reliance is a huge conglomerate that claims to be the most valuable company based in India. One of its many assets is Glimmer, a “private label cosmetics brand,” according to Seeking Alpha. Reliance “has big plans for #beauty & personal care,” ET Now stated on Twitter.
The Outlook of REV Stock
Multiple companies are considering buying Revlon, Seeking Alpha indicated. If a bidding war between multiple firms commences, REV stock could theoretically climb much higher before ultimately being sold at a price significantly above the shares’ current level.
Conversely, if no company ultimately bids for Revlon, the cosmetics firm’s shares are likely to drop much further and could be wiped out. If Reliance winds up as the only bidder for Revlon, the shares could rise moderately if the conglomerate looks to get the deal done quickly. Alternatively, they might move very little or fall meaningfully if Reliance decides to take a tough negotiating approach to the cosmetics firm.
The NYSE Weighs in on Revlon
Meanwhile, the New York Stock Exchange announced yesterday that it would start the process of delisting REV stock from the NYSE due to the company’s decision to seek bankruptcy protection. If Revlon is delisted, however, its shares could move to an over-the-counter (OTC) exchange.
As I noted yesterday, “due to [Revlon’s] meme stock status, the company’s shares jumped 100% on some trading days earlier this year.” But the shares retreated about 50% ahead of yesterday’s trading “after The Wall Street Journal reported on June 10 that a Revlon bankruptcy was in the works.”
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
