Avon Products Nears Sale to Brazil’s Natura Cosmeticos
Deal would mark the end of the independence of an icon of 20th-century business
Avon Products Inc. AVP 1.91% is nearing a sale to Brazil’s Natura Cosmeticos SA, NATU3 0.36% according to people familiar with the matter.
The boards of the two companies have approved the deal, which has been in the works for months, and it is expected to be announced Wednesday—assuming there isn’t a last-minute glitch, one of the people said. The price couldn’t immediately be learned.
London-based Avon’s shares, which are listed in New York, closed at $3.20 Tuesday, giving the company a market value of about $1.4 billion.
The deal would mark the end of the independence of an icon of 20th-century business, which has fallen on hard times as consumer tastes and buying habits have shifted. Avon, known for its sales representatives who peddle its cosmetics door-to-door, has been under pressure from the rise of online beauty sales, which it was late to embrace.
The Wall Street Journal reported in September that Natura and other parties had approached Avon. In March, the Journal reported that Avon directors had discussed a sale to Natura, including a scenario in which Natura would buy the North American business, a separate, private company, in addition to the publicly-traded operation that is based in London and operates elsewhere around the world.
In April, Korean consumer-goods company LG Household & Health Care Ltd. agreed to buy the North America business, controlled by private-equity firm Cerberus Capital Management LP, for $125 million. Cerberus also has a big stake in the international business that Natura is buying.
Natura is Brazil’s largest cosmetics company with its own direct sales force in several Latin American countries and France. It also owns U.K. cosmetics retailer the Body Shop. The company, with a market value of 24.4 billion reais ($6 billion), was founded in 1969 by Luiz Seabra, who is currently co-chairman and forms part of a group of controlling shareholders.
Buying Avon would give Natura a bigger footprint in Brazil and elsewhere in Latin America, Europe and Asia. Given Natura’s ownership of the Body Shop, it would also give Avon a new bricks-and-mortar distribution channel.