NEW YORK, July 12 /PRNewswire-FirstCall/ -- Avon Products,
Inc. (NYSE: AVP) today announced that it has agreed to
purchase all of the assets of Silpada Designs, Inc., the largest
and fastest-growing direct seller of sterling silver jewelry with
operations in the United States,
Canada and the United Kingdom. Completion of the
transaction is subject to customary closing conditions, including
required regulatory approvals. The transaction is expected to close
in the third quarter of 2010.
Avon said that the planned
acquisition is consistent with its previously stated strategy to
explore acquisition opportunities that complement its core beauty
and direct selling business. In line with this, Avon said that it expects Silpada to generate
incremental growth by reaching new consumers and sales
representatives with a higher-priced jewelry brand. The
company added that Silpada will continue to operate as a standalone
business, and that its existing 32,000 independent sales
representatives will be the exclusive sellers of its products
through its party-plan direct selling model.
Avon also said that Silpada
Co-founders Bonnie Kelly and
Teresa Walsh, Chief Executive
Officer and Co-founder Jerry Kelly,
and the entire Silpada management team will continue to lead the
company from their headquarters in Lenexa, Kansas. Jerry Kelly, Silpada's
Chief Executive Officer, will report to Chuck Cramb, Avon's Vice Chairman and Chief Finance and
Strategy Officer, and Silpada's financial results will be
consolidated with those of Avon's
North America commercial business
unit. As part of the transaction, Avon will acquire the company's headquarters
and warehouse facility in Lenexa.
Andrea Jung, Avon's Chairman and Chief Executive Officer,
said, "We look forward to welcoming Bonnie, Teresa, Jerry and all
the employees of Silpada to the Avon family upon completion of the
acquisition. Over the past decade, we have watched Silpada
build an enviable reputation as a fast-growing, high-quality
jewelry brand and one of the most impressive party-plan direct
selling organizations in the world. This new partnership is
an exciting opportunity to reach new consumers and representatives
with a higher-tier brand and direct sales model that complements
our existing business."
Founded in 1997, privately held Silpada has annual revenues of
approximately $230 million and
generates operating margins that are significantly higher than
Avon's. The company offers a
range of approximately 450 sterling silver jewelry products at
higher price points than Avon's
core jewelry offerings. In addition, Silpada's direct selling
model attracts representatives who engage in party-plan selling,
while Avon operates with a
person-to-person relationship-based model.
Avon's Mr. Cramb said, "With
its solid 13-year track-record as a growing profitable business,
Silpada represents an outstanding addition to our portfolio.
We believe that Silpada's strong financial performance, its
disciplined operations and its highly compatible culture based on
empowering women make it a great fit for Avon."
"Silpada has enjoyed strong growth, and we expect that our new
partnership with Avon will help us
to accelerate the growth of our brand throughout the United States and Canada, as well as expand globally with
assistance from one of the world's most dedicated and respected
women's brands," said Jerry Kelly,
Silpada's Chief Executive Officer and Co-founder. "We will
also be able to provide even better support and resources to our
representatives and customers through this partnership."
The transaction will be structured as an all-cash, asset
acquisition. Under the agreement, Avon is expected to acquire the assets of
Silpada for an initial payment of approximately $650 million, and will make a potential
additional payment in early 2015 to the current Silpada
shareholders if certain earnings growth targets are achieved.
Avon said that it expects the acquisition to be accretive to
earnings by $0.03 to $0.05 per share
in 2011.
Centerview Partners LLC acted as financial advisor and Sullivan
& Cromwell LLP acted as legal advisor to Avon. Lazard Middle Market LLC acted as
financial advisor and Lathrop & Gage LLP acted as legal advisor
to Silpada.
Avon, the company for
women, is a leading global beauty company, with over $10 billion in annual revenue. As the
world's largest direct seller, Avon markets to women in more than 100
countries through approximately 6.2 million independent Avon Sales
Representatives. Avon's product line includes beauty
products, as well as fashion and home products, and features such
well-recognized brand names as Avon Color, Anew, Skin-So-Soft,
Advance Techniques, Avon Naturals, and Mark. Learn
more about Avon and its products
at www.avoncompany.com.
Silpada Designs is the world's largest and fastest-growing
sterling silver jewelry home party company. Silpada Design's
sterling silver jewelry is sold exclusively by 32,000 independent
representatives throughout the United
States, Canada and the
United Kingdom. Visit
Silpada.com or call 1-888-SILPADA (745-7232) to learn more
about our jewelry, to find a local representative or to learn how
you can join the Silpada Design's family as an independent
representative.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Statements in this release that are not historical facts or
information are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Words such as
"estimate," "project," "forecast," "plan," "believe," "may,"
"expect," "anticipate," "intend," "planned," "potential," "can,"
"expectation" and similar expressions, or the negative of those
expressions, may identify forward-looking statements. Such
forward-looking statements are based on management's reasonable
current assumptions and expectations. Such forward-looking
statements involve risks, uncertainties and other factors, which
may cause the actual results, levels of activity, performance or
achievement of Avon to be
materially different from any future results expressed or implied
by such forward-looking statements, and there can be no assurance
that actual results will not differ materially from management's
expectations. Such factors include, among others, the
following:
- our ability to implement the key initiatives of, and realize
the gross and operating margins and projected benefits (in the
amounts and time schedules we expect) from, our global business
strategy, including our multi-year restructuring initiatives,
product mix and pricing strategies, enterprise resource planning,
customer service initiatives, product line simplification program,
sales and operation planning process, strategic sourcing
initiative, outsourcing strategies, zero-overhead-growth
philosophy, Internet platform and technology strategies,
information technology and related system enhancements, and cash
management, tax, foreign currency hedging and risk management
strategies;
- our ability to realize the anticipated benefits (including any
projections concerning future revenue and operating margin
increases) from our multi-year restructuring initiatives or other
strategic initiatives on the time schedules or in the amounts that
we expect, and our plans to invest these anticipated benefits ahead
of future growth;
- the possibility of business disruption in connection with our
multi-year restructuring initiatives or other strategic
initiatives;
- our ability to realize sustainable growth from our investments
in our brand and the direct-selling channel;
- our ability to transition our business in North America, including optimizing our
product portfolio and enhancing field fundamentals;
- a general economic downturn, a recession globally or in one or
more of our geographic regions, such as North America, or sudden disruption in
business conditions, and the ability of our broad-based geographic
portfolio to withstand such economic downturn, recession or
conditions;
- the effect of political, legal, tax and regulatory risks
imposed on us, our operations or our Representatives, including
foreign exchange or other restrictions, interpretation and
enforcement of foreign laws including any changes thereto, as well
as reviews and investigations by government regulators that have
occurred or may occur from time to time, including, for example,
local regulatory scrutiny in China;
- the inventory obsolescence and other costs associated with our
product line simplification program;
- our ability to effectively implement initiatives to reduce
inventory levels in the time period and in the amounts we
expect;
- our ability to achieve growth objectives or maintain rates of
growth, particularly in our largest markets and developing and
emerging markets, such as Brazil;
- our ability to successfully identify new business opportunities
and identify and analyze acquisition candidates, secure financing
on favorable terms and negotiate and consummate acquisitions as
well as to successfully integrate or manage any acquired
business;
- the effect of economic factors, including inflation and
fluctuations in interest rates and currency exchange rates, as well
as the designation of Venezuela as
a highly inflationary economy, and the potential effect of such
factors on our business, results of operations and financial
condition;
- our ability to successfully transition and evolve our business
in China in connection with the
development and evolution of the direct selling business in that
market, our ability to operate using a direct-selling model
permitted in that market and our ability to retain and increase the
number of Active Representatives there over a sustained period of
time;
- general economic and business conditions in our markets,
including social, economic and political uncertainties in the
international markets in our portfolio;
- any developments in or consequences of internal investigations
and compliance reviews that we conduct, including the ongoing
investigation and compliance reviews of Foreign Corrupt Practices
Act and related U.S. and foreign law matters in China and additional countries, as well as any
disruption or adverse consequences resulting from such
investigations, reviews or related actions;
- information technology systems outages, disruption in our
supply chain or manufacturing and distribution operations, or other
sudden disruption in business operations beyond our control as a
result of events such as acts of terrorism or war, natural
disasters, pandemic situations and large scale power outages;
- the risk of product or ingredient shortages resulting from our
concentration of sourcing in fewer suppliers;
- the quality, safety and efficacy of our products;
- the success of our research and development activities;
- our ability to attract and retain key personnel and
executives;
- competitive uncertainties in our markets, including competition
from companies in the cosmetics, fragrances, skin care and
toiletries industry, some of which are larger than we are and have
greater resources;
- our ability to implement our Sales Leadership program globally,
to generate Representative activity, to increase the number of
consumers served per Representative and their engagement online, to
enhance the Representative and consumer experience and increase
Representative productivity through investments in the
direct-selling channel, and to compete with other direct-selling
organizations to recruit, retain and service Representatives and to
continue to innovate the direct selling model;
- the impact of the seasonal nature of our business, adverse
effect of rising energy, commodity and raw material prices, changes
in market trends, purchasing habits of our consumers and changes in
consumer preferences, particularly given the global nature of our
business and the conduct of our business in primarily one
channel;
- our ability to protect our intellectual property rights;
- the risk of an adverse outcome in our material pending and
future litigations or with respect to the legal status of
Representatives;
- our ratings and our access to financing and ability to secure
financing at attractive rates; and
- the impact of possible pension funding obligations, increased
pension expense and any changes in pension regulations or
interpretations thereof on our cash flow and results of
operations.
Additional information identifying such factors is contained in
Item 1A of our 2009 Form 10-K for the year ended December 31, 2009. We undertake no obligation to
update any such forward-looking statements.
SOURCE Avon Products, Inc.