
Just 1 week following a group of Avon shareholders called around the company to think about selling itself, the earth's leading direct selling beauty company has appointed a brand new CEO.
The shareholders, led by Shah Capital, Barington Capital Group and NuOrion Partners, sent instructions to Avon's Board on January 29 calling on it “to promptly explore all strategic options to maximise shareholder value, including a sale of the company in whole or in parts” as they were “extremely disappointed” using its “deteriorating” performance.
In the letter, the shareholders said these were also dismayed through the board’s failure to act quickly and decisively on its previous recommendations, including hiring a new CEO(a step t hat it first recommended “over two years ago”) to enhance the company's long-term performance.
“As an effect, the shareholder group has lost confidence within the ability of Avon’s current board to produce meaningful long-term value because of its public shareholders, and sees no reason why shareholders should still wait for turnaround from the board which has overseen a significant destruction of shareholder value.”
The shareholder group believes Avon could be highly appealing to a variety of buyers because of its many positive attributes, including its well-known 130-year old brand; its vast product offering generating over US$5.7 billion in sales; its strong market positions in developing countries for example Brazil, Russia and Mexico; its owned manufacturing operations; and it is six million direct sales representatives.
In addition, the audience claims an international acquirer would immediately take advantage of being able to improve Avon’s capital structure and also the tax efficiency of its operations.
“The shareholder group thinks that a better capitalised strategic buyer would perform a much better job of unlocking Avon’s tremendous value potential compared to company’s current board.”
Three days ago (February 5) Avon announced it has appointed Jan Zijderveld as its new CEO to replace Sheri McCoy who previously announced her intention to retire from the company in March.
Jan joins Avon from Unilever when they have were built with a 30-year career, living and working in seven countries across three continents. He most recently served as a member of Unilever’s executive committee, so that as president of the company's $14 billion European business.