Avon To Be Acquired By Brazil's Natura, Shares Jump 15%

(RTTNews) - Brazil's Natura SA on Wednesday said it has reached an agreement to buy U.S.-based Avon Products Inc (AVP) in an all-stock transaction. The merger would create the world's fourth-largest cosmetics company. Shares of Avon jumped 15% on the news.

As part of the deal, a new Brazilian holding company, Natura Holding SA was created. Based on the exchange ratio of 0.300 Natura Holding shares for each Avon share, Natura shareholders will hold 76% of the combined company, while Avon shareholders about 24%.

The deal is expected to generate annual cost savings of $150 million to $250 million, which will be partially reinvested to further increase presence in digital channels and social media, R&D, brand initiatives and expansion the geographical presence of the group.

The deal values Avon at around $3.7 billion, and the combined group would have an enterprise value of about $11 billion. The merger of Avon and Natura will create a company with annual sales of over $10 billion and more than 40 thousand employees and presence in one hundred countries.

Natura plan to list American depositary shares on the New York Stock Exchange after the deal is completed, which is expected in early 2020.

AVP closed Wednesday's trading at $3.49, up $0.29 or 9.06%, on the NYSE. The stock further rose to $0.53 or 15.19% in the after-hours trade.