Avon to be acquired by Brazil’s Natura for £1.6bn

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Brazilian cosmetics group Natura has announced that it is buying UK-based direct-selling cosmetics business Avon.

Natura, which already owns The Body Shop and Aesop, is Brazil’s top business in cosmetics, perfumes and toiletries.

Its all-stock offer of about $2bn (£1.6bn) means Natura shareholders will hold 76% of the combined company, which will have annual revenue of over $10bn.

The deal will create the world’s fourth-largest cosmetics company.

The new combined company will boast 3,200 stores worldwide with a presence in 100 countries.

Avon has been struggling to modernise its global business over the last few years, as its door-to-door sales model has become less popular in the internet age.

In 2016, the company said it was moving its headquarters from New York to the UK “over time” while cutting 2,500 jobs worldwide as part of a turnaround plan.

At the same time, Avon sold its US operations to investment fund Cerberus.

In April, LG Household & Health Care agreed to acquire both Avon and Cerberus’ stakes in the US business.

According to analysts at Brasil Plural, Natura is “pursuing the goal of becoming a global brand”, but warned it would need to significantly invest in Avon’s operations in Brazil.

Avon already has 2.2 million direct marketing consultants in Brazil.

Natura has a similar business model and many Avon representatives in Brazil also sell Natura products too.

The Brazilian cosmetics maker purchased The Body Shop in a deal believed to be worth 1bn euros ($1.1bn; £880m) from French beauty group L’Oreal in 2017.

Since then, Natura has been trying to turn The Body Shop around, which has suffered from increased competition and a difficult retail environment.

L’Oreal bought the business for around €940m in 2006 at the height of its success but it has failed to thrive since.

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