Ron Perelman, one of the wealthiest men in America, sits down for his first ever Q&A.
Marvin R. Shanken
From the Print Edition:
Ron Perelman, Spring 95
(continued from page 2)
Shanken: When you bought it back, you paid a substantially higher price.
Shanken: You sold Consolidated at what you thought was a very high price in 1984. And then you bought it back at a price well above what you sold it for? According to published reports, you paid $118 millionfor it in 1984 and sold it for $138 million in 1988 and then reacquired it for $188 million in 1993.
Perelman: Theo did a fabulous job in the two years that he ran it for the LBO fund, and it was worth more when we bought it back than it was when we sold it. So it still was a very interesting financial transaction for us to buy it back. I'm glad to be back in the business. I love the business.
Shanken: How do you decide which companies you are interested in buying?
Perelman: There's a financial profile for the companies that we'll buy and won't buy. They've got to be stable cash-flow generators, they've got to be non-capital-intensive cash-flow generators, they've got to be nonfashion and nonfad and non-high-tech. And other than these two categories--fashion and high-tech--we'll look at anything. I look with more interest at companies that excite me with their product line.
Shanken: You say nonfashion and non-high-tech. Isn't Revlon fashion?
Perelman: No. It might be in a given year. In a certain season, certain fashion colors--that this year reds are more popular than the pinks--but we just change the blend a little bit. Cosmetics are a product that has been around for thousands of years and will be around for thousands of years in the future, and you know, besides a slight variation in color, there's really no shape difference or length difference.
Shanken: In terms of Consolidated, it seems as though the repurchase in 1992 was perfectly timed to go with the cigar renaissance. Maybe you didn't know it six months before, but it was very clear six months later that there was something exciting going on in the cigar market. What is your outlook for the future of cigar smoking, given the social climate and the antismoking restrictions and regulations that seem to be spreading across America?
Perelman: We're very optimistic about consumption in the long term. The baby boomers have shown a real interest in smoking cigars. You now have real public cigar smokers--celebrities, sports figures, movie personalities and the like--so that there is sort of an endorsement by the celebrities of cigar smoking and the pleasures associated with it. There are more smokers now than, say, five years ago, but of course consumption is way down from its peak.
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