The all-share transaction will create the fourth largest cosmetics company in the world, with the aim of creating a more competitive business model for Avon, which has suffered from a prolonged decline over the past few years.
The group will now be able to combine both Avon and Natura’s consultants to create a workforce that will number 6.3 million sales representatives.
Acquisition brings positive reaction
As shares in Avon Products surged on the news of the buy out, industry experts also reacted positively, with many pointing to synergies between the two companies that could benefit the struggling Avon Business, particularly in the retail area.
"Given the experience Natura has with building a physical presence through Aesop, The Body Shop and even with the Natura brand’s own increasing physical presence throughout Brazil, it’s a possibility that Avon could eventually again explore bricks and mortar to offset some of its losses from the slowdown in the direct selling channel," said Hannah Symons, global beauty industry manager at Euromonitor International.
"Likewise considering that accessible natural and ethical products is at the core of Natura’s company ethos, Avon can only benefit from these expertise and association with Natura to bring it in line with competitors and to the baseline of what today’s beauty consumer expects from the formulation of their beauty products."
Expanding the global footprint
“The peer-to-peer sales model is evolving towards social selling and the power of digital allows the group to go beyond providing products and advice, and advances women empowerment, through financial independence and enhanced selfesteem,” said Luiz Seabra, Co-Founder of Natura
“We believe that business can be a force for good and together with Avon, we will amplify our pioneering efforts to bring social, environmental and economic value to an ever-expanding network.”
On top of the expanded salesforce, the business will also have a global footprint of 3,200 stores, and an expanded digital presence, thanks to investments by both businesses in this area.
Adding to a string of acquisitions
Combined, the future annual sales for the two businesses are likely to surpass the $10 billion mark, with over 40,000 associates present in more than 100 countries, reaching more than 200 million consumers.
Natura has been aiming to internationalize its business beyond the domestic Brazilian market and in recent years it has managed to achieve considerably broader geographic scope through a string of high profile acquisition.
Avon Products is now added to a portfolio that, as well as Natura and Natura & Co, also houses Aesop and the Body Shop, the latter proving to be an important addition to Natura’s international retail exposure.
Synergies mean cost savings
On top of the increased footprint of the business, there are also expected to be significant cost savings, with executives estimating that Avon synergies could bring annual business expenses down by approximately $150 million to $250 million a year.
“With the support of Natura, we will continue to invest in cutting-edge technology to enhance our digital capabilities and productivity for our Representatives,” said Jan Zijderveld, CEO of Avon.
“Both Avon and Natura are purpose-driven organizations, and the combination will enable us to better serve our millions of Representatives, leveraging Avon’s international presence with the same strongly-held commitment to enhancing Her experience and earnings.”
