Deal
Avon to buy jewelry seller Silpada for $650 million
Avon Products Inc., the world's largest door-to-door cosmetics seller, agreed to buy jewelry company Silpada Designs Inc. for at least $650 million in cash to broaden its line of products.
Avon will make a potential additional payment in early 2015 to current Silpada shareholders if certain earnings growth targets are achieved, New York-based Avon said today in a statement. The purchase will add 3 cents to 5 cents a share in 2011 profit, Avon said.
Avon said the acquisition is part of a strategy to expand beyond beauty products and direct selling. Closely held Silpada, with operations in the U.S., Canada and the U.K., is the largest and fastest-growing direct seller of sterling silver jewelry. The company has annual sales of about $230 million, Avon said.
The transaction requires regulatory approval and is expected to close in the third quarter of 2010, according to the statement. Silpada, based in Lenexa, Kansas, will continue to operate as a standalone business, with its 32,000 independent sales representatives selling products.
Avon sells to women in more than 100 countries through approximately 6.2 million independent sales representatives. Its own direct selling model is based on a person-to-person relationship, Avon has said. Avon's product line includes beauty products, fashion and home products. It has $10 billion in annual sales, according to the statement.
Avon rose 20 cents to $28.27 in New York Stock Exchange composite trading July 9. The shares had dropped 10 percent this year before today.
(Published by Bloomberg – July 12, 2010)