Brazil's Natura acquires Avon Products

By

Benjamin Fitzgerald

Published
May 22, 2019

Brazil’s Natura said on Wednesday it has finalised an agreement to buy U.S. cosmetics competitor Avon Products, making it the world’s fourth-largest cosmetics company.

Under the terms of the agreement, Natura shareholders will hold 76% of the combined company with annual revenue over $10 billion, according to a filing issued late on Wednesday.

As part of this transaction, a new Brazilian holding company, Natura Holding S.A., has been created, added the South American company.

The mega cosmetic group will have a combined 6.3 million consultants and representatives, a global footprint through 3,200 stores, as well as an expanded digital presence across all companies, it added.

The deal is expected to generate annual cost savings of $150 million to $250 million, Natura added. Avon Products shares were up 9 percent at end of trade to $3.49.

Avon Products has been facing global sales headwinds of late. Earlier this month, Avon said it missed first-quarter revenue estimates, hurt by lower number of direct sales representatives in Europe, Middle East & Africa and South Latin America.

For the quarter, total revenue fell 15 percent to $1.19 billion and missed analysts' average estimate of $1.24 billion, according to IBES data from Refinitiv.

In April, the company's struggling North America subsidiary, Avon North America, was sold by investment firm Cerberus Capital Management to LG Household & Health Care for $125 million.

In 2017, Natura acquired L'Oreal's The Body Shop for around $1 billion.

Natura & Co.'s portfolio includes Natura, The Body Shop and Aesop, in addition to newly signed on Avon.