DOW JONES NEWSWIRES
The buyout arm of private-equity giant TPG Inc. has agreed to
buy Avon Products Inc.'s (AVP) 75% stake in Avon Japan for JPY7.3
billion ($90 million) and launch a tender offer for the remaining
stake in the publicly traded entity.
The move is part of the beauty-products maker's plans to refocus
on its direct-selling strategy. The Japanese unit, which represents
less than 2% of Avon's global sales, generated more than half its
sales through direct mail and products that are unique to the
country.
The tender offer by TPG Capital is JPY74 a share, the same price
Avon has agreed to be paid. Avon Japan is Avon's only publicly
traded geographic unit.
The transaction is expected to close by year's end.
Avon Chairman and Chief Executive Andrea Jung said, "While Japan
is an important consumer market, our analysis indicates that we
would need to commit significant additional investment in order to
generate profitable growth in the near to intermediate term."
The move comes as Avon has identified China as its priority
growth market and has been transitioning to a direct-selling model
there from a hybrid model that also includes retail. The company
also has been making some acquisitions that complement its direct
beauty-sales business.
The company last month reported third-quarter profit rose 7% on
higher sales, though the results missed Wall Street's views.
Avon shares closed Friday at $29.78 and were inactive premarket.
The stock is down 5.5% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
Tess.Stynes@dowjones.com