Alberto-Culver Company announced that its board of directors has unanimously concluded that it can no longer recommend the previously announced transaction to merge its Sally Beauty and BSG operations with Regis Corporation. Alberto- Culver’s Board of directors reached its decision after considering, among other matters, Regis’ two consecutive earnings short-fall announcements since the execution of the merger agreement, significant revisions to Regis’ financial forecasts, uncertainty about Regis’ fiscal 2007 outlook and certain differences over operating and governance approaches.
The withdrawal of the recommendation follows Alberto-Culver’s unsuccessful efforts to negotiate some upward adjustment to the previously announced share exchange ratio in light of the substantial reduction in transaction value to Alberto-Culver’s shareholders since Regis’ March 21 earnings shortfall announcement and the failure of attempts to clarify related operating and board governance matters.
Under the terms of the merger agreement, Regis Corporation must determine within five business days to terminate the agreement or conclude that it wishes to ask the shareholders of the Alberto-Culver Company to vote on the transaction. Under the terms of the related Support Agreement executed by certain Company shareholders, those shareholders are now released from any obligation to vote in favor of the transaction.