LG Household & Health Care, Ltd. announced it has entered into a definitive agreement with an affiliate of Cerberus Capital Management, L.P. and Avon Products, Inc. to acquire New Avon, LLC for $125 million in cash.
LG H&H will acquire the entirety of Cerberus’ majority interest and Avon Worldwide’s minority interest in Avon North America. The transaction has been approved by the LG H&H Board of Directors.
LG H&H is Korea’s leading consumer goods company, with strong market positions in all major categories, including cosmetics, personal care and home care. Korea is one of the world’s largest and most innovative beauty markets, with over $13.1 billion in sales in 2018. LG H&H currently distributes a number of its brands in the U.S., including belif and The history of Whoo.
According to LG H&H, the addition of Avon’s iconic brand, award-winning products, dedicated employee base and network of 250,000 sales representatives throughout North America will support the company’s international growth plans. Under LG H&H’s ownership, Avon North America will continue its strategy of product innovation, while strengthening its position as the leading social selling beauty company in the region. Avon North America is expected to benefit from LG H&H’s world-class R&D capabilities in cosmetics, personal care, fragrance, packaging and design.
Suk Cha, CEO of LG Household & Health Care, said, “We recognize Avon North America’s strong brand, leading market position in the region, and talented employees and Representatives. Avon North America’s innovative social selling model builds deep connections with customers and we are excited to leverage this as we continue to expand. We look forward to building on Avon North America’s success to drive customer engagement and long-term growth in this market.”
“LG H&H respects and admires our strong community of Representatives and supports our mission to empower women through economic opportunity,” said Laurie Ann Goldman, CEO of Avon North America. “We are thrilled to welcome our new partner, who shares our commitment to innovation, and our clear focus on putting customers first. We have appreciated our partnership with Cerberus over the last three years and their support as we strengthened the company and reset our path toward long-term success.”
Avon Products, Inc. Responds
London-based Avon Products, Inc. (NYSE: AVP) commented on today’s announcement of the agreement.
“We have built a strong relationship with LG H&H and know them to be a great partner,” said Jan Zijderveld, CEO of Avon Worldwide. “We believe this transaction is a testament to LG’s belief in the strength of Avon’s brand and business model, and are excited to see the progress that Avon North America makes as part of LG H&H.”
The transaction between the separate Avon North America business and LG H&H has no impact on Avon Worldwide’s current operations or strategy. The company also stated that the transaction is unrelated to Avon Worldwide’s previously announced sale of its beauty manufacturing operation in Guangzhou, China to a subsidiary of LG H&H, and the subsequent manufacturing and supply agreement, which was completed in February 2019.