Physicians Formula Acquired by Markwins

Physicians Formula Holdings and Markwins International have entered into a definitive merger agreement under which Markwins will acquire all of the outstanding shares of common stock of Physicians Formula for $4.90 per share in cash, or approximately $74.9M. The per share price represents a premium of approximately 33% to Physicians Formula’s closing stock price on August 14, 2012 and a premium of approximately 40% to Physicians Formula’s one-month volume-weighted average price as of that same date.

Physicians Formula also announced that, immediately prior to entering into the merger agreement with Markwins, Physicians Formula terminated its previously announced merger agreement with affiliates of Swander Pace Capital—Physicians Formula Superior Holdings, LLC and Physicians Formula Merger Sub, Inc. In accordance with the terms of that previous merger agreement, Physicians Formula is required to pay a termination fee of $1,285,000 to the affiliates of Swander Pace Capital.

The Physicians Formula’s Board of Directors, acting upon the unanimous recommendation of its Special Committee composed solely of independent directors, unanimously approved the merger agreement with Markwins and resolved to recommend that the stockholders of Physicians Formula vote to adopt that agreement. Upon the closing of the merger, Physicians Formula will be owned by Markwins and the employees of Physicians Formula will become employees of Markwins.