Swander Pace Capital acquires cosmetics firm Physicians Formula

California-based cosmetics and skin care products manufacturer Physicians Formula announced that it has entered into a definitive merger agreement with private equity company Swander Pace Capital, under which affiliates of the equity firm will buy Physicians Formula.

The deal will see Swander Pace buy up all the outstanding shares in the business allocating $4.24 per share in cash, or about $65m.

Swander Pace said the acquisition price represented a premium of approximately 15% over the closing price of the company’s shares before the deal was formalised.

Physicians Formula chairwoman and CEO Ingrid Jackel said the company’s board of directors conducted a thorough analysis with its special committee, and determined that the transaction offers the best value to the firm’s stockholders.

"We are pleased that Swander Pace has agreed to purchase our company. The firm has a record of success in acquiring and operating companies in the consumer space, and we believe they will add value to our business as we continue to successfully execute our growth initiatives," said Jackel.

The transaction, subject to various closing conditions including receipt of Physicians Formula stockholder approval, is expected to close later in 2012, while the approval will be sought at a special meeting of stockholders.

Physcians Formula, created in 1937, develops, markets and distributes premium-priced products for the mass market channel.

The firm’s products are currently offered in 25,000 stores including those operated by Wal-Mart, Target, CVS and Rite Aid.