Avon in Discussions With Cerberus For Possible Sale

Dec 4 2015 | 6:51pm ET

Avon Products is discussing the sale of its North American business to private equity company Cerberus Capital Management.

The deal, first disclosed by The Wall Street Journal yesterday, would deliver a needed cash infusion to the company, according to unnamed individuals familiar with the matter. At the same time, the proposed deal would involve Cerberus taking an equity stake in Avon essentially through a PIPE deal. 

Founded more than 130 years ago and famous for its door-to-door sales model, Avon iconic direct-to-consumer brand has suffered as sales have fallen for four straight years. Rejecting an $11 billion offer from Coty three years ago, Avon’s market capitalization is now just under $1.85 billion.

Activist investor Barington Capital, meanwhile, has taken a 2.8% position in Avon and believes it has value provided changes, including new management, are introducted. Barington would reportedly oppose any arrangement with Cerberus that values Avon at or near its current valuation, according to Reuters. 

Avon shares have lost 80% of their value since April 2012, although they rose 7% Thursday on the news and a further 5% today to end the week at $4.22.

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