Avon Products Inc is in talks with investment firms about selling a stake in itself, potentially bringing in a partner to help the cosmetics maker turn itself around, a person with direct knowledge of the matter said on Thursday.
The company has discussed bringing in a private equity firm for what is known on Wall Street as a private investment in public equity (PIPE). Such a move is essentially a negotiated stake sale by a publicly traded company.
Bids are expected within the next several weeks, though this person cautioned that Avon was exploring other options and might choose not to pursue a PIPE.
The company — best-known for its army of door-to-door sales representatives — managed to fend off an unwanted takeover bid by a cosmetics rival, Coty Inc, three years ago.
However, it has failed to reverse nearly five years of falling sales and almost four years of losses.
Avon spokeswoman Lindsay Fox declined to comment on the investment discussions, which were reported earlier by the Wall Street Journal.
The newspaper said Avon has been in discussions with firms such as Cerberus Capital Management and Platinum Equity, citing unidentified people familiar with the matter.
Avon’s share price has tumbled nearly 87 percent over the past five years. Its stock jumped as much as 13 percent after the report was published, but soon gave up the gain and closed at US$4.10 in New York, down 9.5 percent. That values the company at just under US$2 billion.
Avon still had about US$696.9 million in cash and short-term investments as of June 30.
However, the company carries about US$2.2 billion in long-term debt and its bonds are rated at junk level with a negative outlook by Moody’s.
Avon has struggled to pull out of a slump and is projected to post its fourth straight year of losses and declining sales this year, according to data compiled by Bloomberg
Additional reporting by Bloomberg
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