Consumer Products

Avon Sets Special Dividend Ahead of Merger With Brazil's Natura

Paul Ausick

Brazilian company Natura & Co announced last week that it had received all regulatory approvals to complete its acquisition of Avon Products Inc. (NYSE: AVP) and expects to close the $3.7 billion merger on January 3, 2020. On January 6, Natura will begin trading American depositary receipts (ADRs) on the New York Stock Exchange under the ticker symbol NTCO. Shares will continue trading on São Paulo’s B3 exchange.

Avon will pay a special one-time dividend in advance of the closing on its common and Series C preferred stock of approximately $0.016 per share to shareholders of record on December 30. The dividend will be paid on January 6.

The merger was announced on May 22 and will create the world’s fourth-largest pure-play beauty company, trailing only L’Oreal, Estee Lauder and Shiseido.

Natura & Co acquired The Body Shop from L’Oreal in 2017 for $1.1 billion. Prior to that it had taken a 65% stake in Australian skin-care brand Aesop and acquired the remaining shares in the company in 2016. The company’s own Natura brand, like Avon a direct marketing operation, is a multinational cosmetics and personal care brand.

Avon sold its faltering U.S. business in 2015 to private equity firm Cerberus Capital Management. Following the sale, Avon moved to London to better manage its remaining international businesses, including its Brazilian operations, where Natura had become a fierce competitor.

Natura plans to turn the Avon brand around by speeding up its moves into e-commerce and its development of new products. The Brazilian firm sees cost savings of $150 million to $250 million from the combined company.

Avon stock closed at $5.79 on Thursday, up 0.7% for the day, in a 52-week range of $1.41 to $5.82. The high was posted on Tuesday.