Beauty products direct seller Avon Products Inc. (AVP) said it
will buy closely held sterling-silver jewelry seller Silpada
Designs Inc. for at least $650 million.
An additional payment will be made to current Silpada
shareholders in early 2015 if certain earnings-growth targets are
hit. The potential size of the payment wasn't disclosed.
Avon--which has seen struggling sales in North America--said it
expects the purchase of Silpada, which has a party-selling model
that contrasts Avon's person-to-person selling model, to boost
earnings by 3 cents to 5 cents a share next year. The acquisition
is expected to close this quarter. Silpada will continue to operate
as a standalone business based in its Kansas headquarters and led
by its executive team, which will now report to Avon executives,
Avon said.
Silpada has annual revenue of about $230 million and generates
operating margins "significantly higher than Avon's," Avon said.
The company offers about 450 sterling-silver jewelry products at
higher price points than Avon's jewelry offerings.
In April, Avon said its first-quarter earnings fell 64% on
charges related to the devaluation of Venezuela's currency, masking
solid sales gains.
Shares of Avon closed Friday at $28.27 and were inactive
premarket. The stock has risen 13% in the past year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@dowjones.com;