Avon Products

2019

The Natura&Co company announced merger of Avon Products, Inc in May, 2019. by means of acquisition of all stocks of the company. Creation of the world's fourth largest specialized cosmetic^[1] will become result of this transaction].

In the course of the company merger the multibrand and multichannel holding of the industry of beauty about more than 6.3 million consultants and representatives of Avon and Natura, with a geographical coverage of 3,200 shops will be created worldwide. According to preliminary estimates, the annual gross income of the consolidated enterprise will make over 10 billion US dollars. As a part of group over 40,000 employees in 100 countries of the world will work.

Natura &Co expects that the purposeful synergy which will annually bring from 150 to 250 million US dollars will become result of merge. A part of these means will be reinvested in further expansion of opportunities of group in aspects of sales through digital and social channels, research activity and implementation of initiatives of promotion of a brand and also in further expansion of geographical presence of group.

Within the transaction the new Brazilian holding company Natura Holding S.A was founded. Taking into account the fixed exchange coefficient at the level of 0.300 stocks Natura Holding for each common share of Avon, shareholders of Natura &Co will receive about 76% of all shares of the united company, and shareholders of Avon will possess about 24% of stocks. On the basis of the undistorted share price of Natura at the time of closing of biddings on March 21, 2019, a day before official confirmation of the fact of negotiations between Avon and Natura, this transaction will bring to shareholders of Avon the bonus allowance in the amount of 28% and means 9.5-or 5.6-fold increase in an indicator of EBITDA for 2018 on condition of complete implementation of the effect of synergy expected by Natura company. Taking into account the share price for the moment of closing of the exchange on May 21, 2019, Avon cost during this transaction is estimated at the level of 3.7 billion US dollars, and market capitalization of joint group will make about 11 billion US dollars. After completion of the transaction of the stock Natura Holding S.A. will be registered at B3 exchange. 55% of stocks will be in free circulation. The company is also going to place the ADR at the NYSE exchange. Shareholders of Avon will be able to select between receiving ADR traded at the New York Stock Exchange or the actions registered on B3.

After end of all formalities the board of the united company will consist of 13 directors, 3 of which will be appointed Avon. The transaction is subject to observance of standard conditions, including receiving approval from shareholders of Natura &Co and Avon and also antimonopoly authorities of Brazil and some other jurisdictions. It is going to close the deal by the beginning of 2020.

UBS Investment Bank and Morgan Stanley acted as financial advisors of Natura &Co. Services of finance consulting of Avon were provided by Goldman Sachs company, and PJT Partners acted as financial advisors of Board of Directors of Avon.