Avon Products

History

2024: Bankruptcy Declaration

On August 12, 2024, Avon Products Holding, which owns the rights to the Avon beauty brand, filed for bankruptcy. The corresponding statement was sent to the Delaware County Court in the United States.

The bankruptcy process comes amid a slew of lawsuits against beauty market participants, including Avon, which has been hit with more than 100 lawsuits. The essence of the claims is that talc is used in face powder and eyeshadow, which can allegedly provoke the development of malignant formations. There is a link between talc and cancer and Avon's products are said to be "contaminated with asbestos." The company itself has repeatedly denied the allegations, claiming it "only uses cosmetic quality talc, which has been tested and confirmed to be asbestos-free."

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Bloomberg

In early July 2024, specialists from the International Agency for Research on Cancer (IARC) at the World Health Organization (WHO) classified talc as a potentially carcinogenic substance. Experts, in particular, point to regular mentions of an increase in the incidence of ovarian cancer in women who independently reported the use of body powder.

Holding Avon Products filed for bankruptcy in order to protect itself from debt obligations and lawsuits related to the use of talc. It is said that Avon Products has not distributed its products in the United States since 2016, but remains the parent company for brand divisions located in other countries. The company declares its intention to continue expanding the business.

We remain focused on driving our business strategy internationally, including upgrading our direct sales model and reviving the brand to accelerate growth, "said Avon CEO Christoph Neirynck[1]

2019

Natura & Co announced in May 2019 the acquisition of Avon Products, Inc. through the acquisition of all shares in the company. The result of this deal will be the creation of the world's fourth largest specialized cosmetic group^[2]

During the merger of the companies, a multi-brand and multi-channel holding of the beauty industry will be formed with more than 6.3 million consultants and representatives of Avon and Natura, with a geographical coverage of 3,200 stores around the world. According to preliminary estimates, the annual gross income of the combined enterprise will be over $10 billion. The USA group will employ over 40,000 employees in 100 countries around the world.

Natura & Co expects the merger to result in targeted synergies that will generate between $150 million and $250 million annually. UNITED STATES. Some of these funds will be reinvested in further expanding the group's capabilities in the aspects of sales through digital and social channels, research activities and the implementation of brand promotion initiatives, as well as in further expanding the geographical presence of the group.

As part of the transaction, a new Brazilian holding company Natura Holding S.A. was established. Taking into account a fixed exchange ratio of 0.300 shares of Natura Holding for each common share of Avon, Natura & Co shareholders will receive about 76% of all shares of the combined company, and Avon shareholders will own about 24% of the shares. Based on Natura's undistorted share price at the close of trading on March 21, 2019, the day before the formal confirmation of the negotiations between Avon and Natura, this transaction will bring Avon shareholders a bonus premium of 28% and implies a 9.5- or 5.6-fold increase in 2018 EBITDA, subject to the full realization of the synergies expected by Natura. Taking into account the share price at the close of the exchange on May 21, 2019, the value of Avon during this transaction is estimated at $3.7 billion. US, and the market capitalization of the combined group will be about $11 billion. UNITED STATES. Upon completion of the transaction, shares of Natura Holding S.A. will be listed on the V3 exchange. 55% of the shares will be in free float. The company also plans to list its ADRs on the NYSE exchange. Avon shareholders will be able to choose between receiving ADRs traded on the New York Stock Exchange or shares listed on the V3.

Upon completion of all formalities, the board of the combined company will consist of 13 directors, 3 of whom will be appointed by Avon. The transaction is subject to standard terms, including obtaining approval from shareholders of Natura & Co and Avon, as well as antitrust authorities in Brazil and some other jurisdictions. The deal is scheduled to be completed by early 2020.

UBS Investment Bank and Morgan Stanley acted as financial advisers to Natura & Co. Avon's financial consulting services were provided by Goldman Sachs, and PJT Partners acted as financial advisers to Avon's board of directors.

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