The iconic cosmetics company is selling its North American business and a stake in itself to Cerberus Capital Management. Fred Katayama reports.
Cerberus calling. The private equity firm is buying most of Avon's business in North America. Cerberus Capital Management will also take a 17 percent stake in the parent company, spending a total of over $600 million for both stakes. The iconic door-to-door makeup and perfume company isn't as pretty as it once was. It's currently valued on the market at $1.8 billion. Three years ago, smaller rival Coty offered to buy Avon for $10 billion, but the board rejected that bid Under the deal, Avon will name three Cerberus members to its board. The agreement was struck after activist investor Barrington Capital had warned against the sale of the American unit. It sees Avon as undervalued. It, Avon and Cerberus were unavailable for comment. Avon has been unable to bounce back from its nearly four-year erosion of sales. It keeps losing its fabled sales reps known as "Avon Ladies" in the U.S. and customers to shopping on the Internet. Avon's shares, which have shed more than half its value this year, got a lift in early trading on news of Cerberus' move.