Avon in talks sell North American arm to Cerberus

The cosmetics company has been struggling for years because its door-to-door business model became less effective and its sales were recently hurt by the strength of the dollar particularly in emerging markets. Barington intends to nominate a slate of director candidates for the 2016 annual meeting in an attempt to gain sway over the board.

The Barington Group noted that it strongly believes in Avon’s long-term prospects and are confident that with the right leadership in place Avon can recover its position as a leading global beauty brand.

“Avon’s stock price has fallen from its 2012 high of $23.52 (reached shortly after the Board rejected Coty, Inc.’s (NYSE:COTY) fully financed cash offer to acquire the Company for $23.25 per share) to $3.73 as of December 2, 2015, a loss of approximately $8.5 billion in market capitalization”.

“We are aware that Barington has made a public announcement expressing its views on our business”, Avon said, in a statement. The company said it regularly reviews a wide range of options for its business and operations.

Avon is discussing a sale to Cerberus Capital Management, according to reports from The Wall Street Journal and Reuters.

According to Barington Capital Group, which also includes NuOrion Partners AG and other investors, believes that the cosmetic giant does not need to take cash from private equity firm and has an ability to fix its operations.

“We remain focused on taking strategic actions to drive sustainable, profitable growth, address changing and challenging industry dynamics, create opportunity for our representatives and enhance value for all Avon shareholders”, Avon told Bloomberg. Finally, Piper Jaffray reissued a “neutral” rating and set a $3.00 price objective (down from $5.00) on shares of Avon Products in a research report on Friday, November 6th.

Avon Products, Inc.is a manufacturer and marketer of beauty and related products. Earnings in the quarter were $1.11 a share, compared with the $1.05 that analysts predicted. Barington says it has about a 3 per cent stake in the New York-based company. It would also oppose a sale of a dilutive equity stake at a “fire sale” price.