Helen of Troy Unanimously Rejects $37-a-Share Cash Offer
Key Facts
Helen of Troy’s board of directors reaffirmed on November 12 its unanimous rejection of Empower Brands’ nonbinding offer to buy all outstanding shares for $37 a share in cash, saying the proposal significantly undervalued the company and its prospects. The company had said the board rejected the offer on October 20, and its latest statement reaffirmed that position. Empower raised its offer to $37 a share on October 12, after starting with a $34 proposal on August 19. In its investor presentation, the company said the board remained open to credible opportunities that could enhance shareholder value. But the statement said no tender offer had commenced by that time, leaving the proposal in the realm of nonbinding negotiations.
Empower presented the price as a 28% premium to the closing price on October 30 and a 31% premium to the volume-weighted average price over the 30 trading sessions ended that day. It also said the price was 16% above the stock’s 52-week high of $31.98 on October 30. It described the increase from $34 to $37 as an increase of about 9%. EL7 data show the stock closed at $37.99 on November 11, above the proposed cash price, but that closing price does not change the offer’s nonbinding status. These comparisons form the buyer’s pricing rationale, while the board’s rejection rests on its assessment of the company’s plan and expected results.
Helen of Troy says its five-year roadmap targets low- to mid-single-digit net sales growth, high-single-digit adjusted EBITDA growth and mid- to high-teens adjusted earnings-per-share growth. It also targets converting about 75% of adjusted EBITDA into free cash flow by year five. The company says it will reinvest $66.5 to $70.5 million of tariff refunds in its business and brands. Those targets frame the board’s argument that continued execution of the plan could support higher long-term value. The CEO described second-quarter results as continued progress on the multiyear roadmap, and said adjusted EBITDA and adjusted EPS exceeded expectations.
The company also points to improved profitability and lower leverage. Net sales since the start of the fiscal year rose 4.9% through the second quarter of fiscal 2027, and gross margin widened 800 basis points year over year in the quarter to 52.2%. The company attributed about 240 basis points of the improvement to underlying business activity and about 560 basis points to tariff refunds, after accounting for higher tariff costs. Net leverage was 3.0 times in the quarter, while net debt fell $244 million, from $917 million at the end of fiscal 2025 to $673 million in the second quarter of fiscal 2027. Adjusted EBITDA margin was 11.2%, compared with 8.4% a year earlier.
Second-quarter results show a more mixed picture for sales and profitability. Consolidated sales rose 2.1% to $440.9 million, while adjusted diluted EPS increased to $0.79 from $0.59 and adjusted EBITDA rose to $49.4 million from $36.2 million. In the Beauty & Wellness segment, sales fell 4.5% to $213 million, with the company citing weak consumer demand and competition in premium hair styling and care devices, as well as lower demand for water filtration. Helen of Troy raised its fiscal 2027 guidance to sales of $1.768 billion to $1.822 billion, adjusted EPS of $3.60 to $4.15 and adjusted EBITDA of $203 million to $210 million. The outlook is based on a continued recovery, while weakness in demand in some businesses remains part of the operating picture.
On tariffs, the company said it expects refunds of about $80.5 million in fiscal 2027 and plans to reinvest 83% to 88% of them in the business. It estimated this would result in a net pretax benefit of $10 million to $14 million after reinvestment. These annual estimates differ from the $66.5 million to $70.5 million allocated for reinvestment in the business and brands plan. Company figures show the refunds contributed to the improvement in gross margin in the quarter, alongside the improvement it attributed to underlying business activity. The board’s case therefore combines targeted spending to support the business with financial improvement already recorded by the company, while part of the outlook depends on benefits tied to the refunds.
On the offer process, Empower said it remained willing to engage and had submitted a specific request for information that excluded competitively sensitive information. It said it was willing to sign a customary confidentiality agreement, but would not accept a standstill provision that would restrict its actions. In Helen of Troy’s statement, the company said no tender offer had commenced, while its board kept the door open to credible opportunities that could enhance shareholder value. The disclosed facts include no merger agreement or board acceptance of a return to negotiations. The dispute therefore continues between a stated cash price and an independent plan with published targets, with no final deal as of November 12.