Inter Parfums Sa stock tumbled 6.1 percent Tuesday, following news that Burberry had exercised its option to buy out the license rights for its fragrance and beauty products —effective dec. 31 — while discussions between the two companies remain ongoing.
The buyout price is 181 million euros, or $222.6 million at current exchange, exclusive of receivables, inventories and other tangible assets.
Burberry’s fragrance business generates approximately 50 percent of inter Parfums’ net sales, and makes about 2 percent of the u.K.fashion brand’s revenues and 5 to 7 percent of its earnings before interest and taxes, according to a research note from citi, which maintained Burberry’s neutral rating.

Burberry and inter Parfums Sa, the French subsidiary of inter Parfums inc., have been in talks since december 2011 about establishing a new operating structure for the Burberry beauty business. Burberry had until July 31 to determine whether it wished to buy out the unexpired portion of the license or continue the existing license, which runs through dec. 31, 2017.
“Discussions longer and more complex than expected have naturally led Burberry to exercise its option to buy out the license agreement before the July 31 deadline to ensure its ability to benefit from all possible alternatives,” stated Philippe Benacin, chairman and chief executive officer of inter Parfums Sa. “On our side, we have largely anticipated the consequences of this partnership being extended or not.”
Other potential partners for the Burberry fragrance license include P&G, L’Oréal, Puig and Shiseido’s Beauté Prestige
international.
Via WWD