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What: Shares of Elizabeth Arden, Inc. (NASDAQ: RDEN) were surging Friday on word that Revlon, Inc. (NYSE:REV) would acquire the company for $14 a share, or approximately $870 million. Elizabeth Arden jumped nearly 50% on the news, trading up 48.7% as of 12:50 p.m. EDT, while Revlon also got a boost, increasing 7.4% at the same time.

So what: The jump in both the target and the acquirer's stock shows the market's overwhelming approval for the deal as well as confidence that it will go through. Elizabeth Arden stock was trading near the offer price of $13.85.

The two companies called the combination "highly complementary" and said the new company would benefit from "greater scale, expanded global footprint, and a diversified presence across major categories and channels."

In the press release, the company also said the new company would benefit from $140 million in cost-saving synergies.

Now what: Elizabeth Arden stock had traded above the buyout price as recently as a year ago and was worth nearly $50 in 2013, but the acquisition seems like the best outcome for the company now as it's put up mounting losses in recent quarters and struggled to find meaningful growth. Consolidation has also been a trend in the beauty industry as Coty recently acquired Procter & Gamble's beauty business and a number of smaller brands have been snatched up by industry heavyweights like Unilever and Estee Lauder.

As two of the smaller players in the industry, a tie-up between Revlon and Elizabeth Arden makes sense. The deal is pending approval of Elizabeth Arden shareholders and is expected to close by the end of the year. Revlon reiterated its guidance to say it expected revenue from the combined company of about $3 billion and adjusted EBITDA at around $560 million.

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