Cerberus to back Avon with $435M, carve out North America unit
December 18, 2015
Cerberus Capital Management has agreed to a $435 million investment in Avon Products (NYSE: AVP). The transaction will take the form of convertible perpetual preferred stock with a conversion price of $5 per share, which represents a 46% premium to the 30-day volume-weighted average price. Assuming the conversion to common stock, the investment equals a roughly 16.6% ownership interest as of December 16. In addition, Cerberus will purchase an 80.1% stake in the company’s Avon North America unit for $170 million. Avon intends to use $100 million of the proceeds to partially offset transferred liabilities and around $250 million may be used to opportunistically reduce debt. The remaining capital, along with the company’s suspension of quarterly dividend effective 1Q, will be used to support restructuring and reinvestment in the business.