Natura Cosmeticos and Avon Products Inc. announced that they are in advanced talks over a potential all-stock transaction.
The Sao Paolo, Brazil-based Natura said in a statement that the two parties are negotiating the final details of the deal but cautioned that agreement may not be reached. Avon later confirmed talks are at an advanced stage.
Avon shares rose nearly 22 percent in pre-market trading in New York on Wednesday.
Reuters reported last week that Natura was close to completing the deal to buy Avon, which has a market capitalization of $1.42 billion, as per Refinitiv data.
Citing people familiar with the matter, the Financial Times reported on Wednesday that Natura will buy Avon in an all-stock deal that values the U.S. group at more than $2 billion.
Natura will end up owning about 76 percent of the combined group while the rest will be owned by Avon shareholders, the FT said. The Wall Street Journal reported the boards of the companies have approved the deal.