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What: Shares of Elizabeth Arden (NASDAQ:RDEN) were getting smudged today, falling as much as 19% after LG Household & Healthcare withdrew its bid to acquire the struggling cosmetics company.

So what: Shares of Elizabeth Arden had rocketed higher in April when LG first expressed interest, as the Korean firm has been looking for more acquisitions to help its overseas expansion. Given the spike on the initial interest, it's only natural for shares to fall as that possibility evaporates. LG's announcement comes after Arden announced a restructuring and cost-cutting plan earlier this week, which prompted its change of mind. The cosmetics maker plans to exit unprofitable segments, and said it would cut jobs, but did not say how many. The restructuring will result in pre-tax charges of $65 million to $72 million for the current quarter.

Now what: Arden shares fell to a 52-week low on the news, as a buyout is often seen as the best option for a struggling company like this one. In April, Elizabeth Arden hired Goldman Sachs to help it explore strategic options, including a possible sale, but LG's disinterest also makes it seem unlikely that another party would be interested in purchasing the makeup company. In its most recent quarter, the company saw sales plummet 20.3%, leading to an adjusted loss of $0.84 per share. Perhaps the restructuring plan can help the company return to growth and profitability, but for now, this looks like a falling knife. 

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Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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