Revlon to acquire Elizabeth Arden in $870 million deal. Pictured: A Revlon store displaying cosmetics [Representational Image].Wikimedia commons

Revlon, an American multinational cosmetics company, is set to buy Elizabeth Arden in an $870-million deal. Through the acquisition, Revlon seeks to strengthen its skincare, perfumes business. 

Revlon is an 84-year-old company that boasts of strong sales in colour cosmetics and hair colour. The cosmetic products are distributed through mass retail channels in 130 countries across the globe. On the other hand, the 106-year-old Elizabeth Arden caters to the luxury skincare market, mainly in anti-ageing category as well as fragrances by celebrities such as Taylor Swift and Britney Spears.

Revlon said it was looking for an opportunity to restore Elizabeth Arden's fortunes, Bloomberg reported.

"The combination will leverage Revlon's scale across major vendors and manufacturing partners, improving distribution and procurement," Reuters quoted Revlon as saying.

Elizabeth Arden has been reporting low revenue in six out of the last eight quarters as the Florida-based company has been losing customers to rivals who offer better deals and discounts.

The all-cash deal will help Revlon to expand its presence in skincare and perfume category and in other markets such as China and Asia, where Elizabeth Arden has its footing. The combined annual sales of the two companies will roughly be about $3 billion, the Wall Street Journal reported.

Citigroup and Bank of America Corp have agreed to help pay for the acquisition and finance Elizabeth Arden's debt. In addition, Revlon expected to save $140 million from the merger by sharing a distribution network and removing "duplicated operations," Bloomberg added.

Both the companies reportedly said "the combination will leverage Revlon's scale across major vendors and manufacturing partners, which would improve distribution and procurement."