<BREAKFAST WITH THE FOOL>

Friday, May 21, 1999

"Never go to a doctor whose office plants have died." -- Erma Bombeck

Latest Market Numbers

Revlon in Talks With Coty

Debt-ridden cosmetics company Revlon (NYSE: REV) is in preliminary talks to be acquired by Coty Inc., The New York Times reported. Coty, a subsidiary of Dutch consumer products company Benckiser NV, had revenues last year of $1.6 billion compared with Revlon's $2.2 billion. Revlon is controlled by billionaire financier Ron Perelman. Revlon shares have risen 23% to $29 1/4 in the past week on merger speculation.

Revlon's brands include Revlon, ColorStay, Age Defying, Almay, Ultima II, and Flex. The company has suffered from declining retail orders in the U.S. and slowing sales overseas, which have resulted in disappointing financial results and dismal stock performance -- Revlon shares have fallen as low as $12 a share. In April, Perelman announced he would consider selling his prized Revlon and said the company had hired Goldman Sachs and Lazard Freres to review its options.

Coty has a strong perfume and makeup business worldwide, but in the U.S. it needs strong makeup brands to round out its fragrance line, which includes Jovan Musk, Lady Stetson, and Sand and Sable. Other names rumored to be potential bidders for Revlon are Unilever NV (NYSE: UN), the Dutch consumer goods company that makes Elizabeth Arden cosmetics; Shiseido Co., a Japanese cosmetics company; and Procter & Gamble (NYSE: PG), which makes Cover Girl cosmetics.

Our own Dale Wettlaufer recently drafted an open letter to the chairman of Estee Lauder proposing that it acquire Revlon. So far, he has not heard back from Mr. Lauder.

News to Go

Drug maker Warner-Lambert (NYSE: WLA) is reportedly in merger talks with Schering-Plough (NYSE: SGP), according to Bloomberg, though no agreement is pending. Schering-Plough is the eighth-largest U.S. drug maker, and Warner-Lambert is number nine. Analysts cited by Reuters dismissed the possibility of a merger between the two companies, saying, among other things, that Warner-Lambert's newly installed CEO is more likely to set out to grow the company himself than sell it now.

Biopharmaceutical company Immunex (Nasdaq: IMNX) issued a seven-year, 3% coupon, convertible subordinated note to its majority owner, American Home Products (NYSE: AHP), for $450 million. Immunex said the financing will "fuel our strategic plan and help Immunex capitalize on global opportunities for continued growth." The note is convertible into common stock of Immunex at a price of $173.68 per share, a 30.5% premium Immunex's closing price yesterday of $133 1/8.

Medical devices maker Boston Scientific (NYSE: BSX) announced it has won approval from the Food and Drug Administration (FDA) to market a new stent system for the treatment of coronary artery disease. The company said the system will be fully launched in the U.S. over the next several weeks.

The board of Chock full o'Nuts Corp. (NYSE: CHF) unanimously concluded that the $10.50 per share offer from Sara Lee Corp. (NYSE: SLE) "does not adequately reflect the potential value of the company" and recommended that shareholders reject the bid by not tendering any shares to Sara Lee. Chock full o'Nuts said it is pursuing talks with other potential buyers and has asked Credit Suisse First Boston to assist in evaluating alternatives.

Electronics manufacturing company Solectron Corp. (NYSE: SLR) said it will acquire privately held Sequel Inc., which specializes in notebook computer and liquid crystal display (LCD) repair service and support, for an undisclosed sum. The deal is expected to be completed by the end of June.

Equipment rental firm NationsRent (NYSE: NRI) announced it has ended its merger agreement with Rental Service Corp. (NYSE: RSV) because the terms of the previously disclosed agreement "restricted our ability to continue the growth of our business through acquisitions and internal expansion." NationsRent will take an unspecified pre-tax charge in the second quarter related to the failed merger, which will be partially offset by a $6 million payment from Rental Service.

Auto parts maker Delphi Automotive Systems (NYSE: DPH) will be added to the S&P 500 Index, replacing Moore Corp. (NYSE: MCL) after the close of trading on May 27. General Motors (NYSE: GM) is spinning off its remaining 80.1% stake in Delphi to GM shareholders. Moore Corp. is being removed for lack of representation.

Hanger Orthopedic Group (NYSE: HGR) will replace CompDent Corp. (Nasdaq: CPDN) in the S&P SmallCap 600 Index after the close of trading today. CompDent is being acquired by private investment firm TAGTCR Acquisition Inc.

Earnings to Go:
(Quarterly earnings per share versus that of the same year-earlier quarter and compared with analysts' mean estimate. Where noted, earnings exclude one-time charges and gains.)

ADC Telecommunications (Nasdaq: ADCT) -- fiscal Q2 EPS: $0.32 vs. $0.25 last year; estimate: $0.30

Wind River Systems (Nasdaq: WIND) -- fiscal Q1 EPS: $0.11 (before charges) vs. $0.11 last year; estimate: $0.12

More Foolishness

(Dale explains further the reasoning behind the Boring Portfolio's decision to sell Cisco Systems in "A View to a Sell"... See what Fools are talking about on the message boards -- Berkshire, Amazon, Starbucks and more... Find out more about USA Networks Chairman Barry Diller.

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor