Avon strikes deal for new investment

Avon strikes deal for new investment December 17, 2015 10:49 PM International cosmetic brand Avon said it had reached an agreement with a private investment firm designed to boost the company's performance. Cerberus Capital Management will invest $605m (£406m) in Avon. As part of the agreement, the North American division will be separated from the rest and mostly controlled by Cerberus. Avon's North American business has been struggling, while its growth in emerging markets has been strong. Avon's sales in North America accounted for just 14% of the company's revenue in 2014. Sales in Latin America made up nearly half of the company's total sales during that year. "We believe that the separation of Avon North America is the best way to ensure that both businesses have an unencumbered path to profitability and growth," said Sheri McCoy, chief executive of Avon Products. New products Cerberus will pay $170m for an 80% stake in Avon North America and will appoint a new chief executive. The investment firm said it will focus on creating new product lines and new incentive structures for its sales representatives. The firm will also make a separate $435m investment for a minority stake in the international brand, Avon Products. The company has turned down previous offers from would be buyers. In 2012, beauty brand Coty made a $10bn offer to buy Avon that was rejected. With the company's stock price falling 55% over the year, the executive team appeared to be changing their minds about buyouts. Shares rose 1.2% following the deals announcement. A long history Avon, known for its catch phrase "Avon Calling" was set up in 1886. The company relies on a direct door-to door sales method rather than selling products in stores. Most of Avon's sales representatives are women and the company prides itself on female empowerment. "We are strong believers in the direct selling model, the principle of empowering Representatives, and the growth that direct selling can generate when Representatives are appropriately supported and incentivised to build their businesses," said Ms McCoy. BBC © 2015