Avon Products has averted a proxy battle with shareholder Barington Capital and other big investors. Fred Katayama reports.
Avon reaches truce over board seat
Makeup maker Avon making up with activist investors. It has averted a proxy battle with shareholders Barington Capital and other big investors, who had earlier called for a restructuring of the 130-year-old marketer of beauty and skin products. Avon’s deal gives those investors the right to approve a new independent director to the company’s board, and that investor group agreed to back Avon’s appointment of a former FedEx executive to its board.
Wall Street applauded the peace deal, sending shares higher in early trading.
The truce comes just two weeks after Avon said it would cut seven percent of its staff and shift its corporate headquarters to the U.K. from the U.S. Avon has been under pressure. Its door-to-door sales model has been eroded by the increase in working women. Faced with a slumping stock, declining revenue, and restructuring demands from the activist shareholders in December, Avon sold a stake in the company and its North American business to hedge fund Cerberus Capital Management.