Natura &Co may separate Avon from Natura to unlock “full potential of both companies”

07 Feb 2024 --- Natura &Co is considering the separation of Natura &Co Latam from Avon by creating two independent listed companies. Natura says its board approved exploring this avenue as part of ongoing efforts to streamline operations, enhance brand autonomy and deliver greater value to shareholders.

According to a company statement, the aim of the study is to create more value whereby “Natura would continue to operate with both brands in the region, so the potential separation would not impact the integration of the brands in Latin America.”

“In turn, Avon would indirectly benefit from the sales in Latin America through a commercial arrangement with Natura, while continuing its operations in other markets outside Latin America.”

Two weeks ago, Natura &Co said it would delist from the New York Stock Exchange and keep its primary listing in Brazil.

Ensuring distinct business
The cosmetics company believes Natura and Avon could better serve their individual beauty consultants and customers if they were independent businesses. Each company would enjoy “independent governance and management teams.”

Moreover, the company says shareholders would gain greater transparency into the performance and prospects of each business.If the split goes through, Natura and Avon, two separate publicly traded beauty companies, will be established.

History of Avon
Avon has a history spanning 135 years and is present in more than 70 countries. The company says it focuses on meeting women’s needs and voicing their concerns while being committed to gender equality.

Kristof Neirynck was recently named as the new CEO and takes over at a time when Avon has been losing market share to competitors.

Avon International’s revenue was down 2.3% with a net revenue of BRL1.46 billion (US$293 million) in Q3 2023, with its Beauty category growing 1.8%, driven by fragrance, while Home & Style continued to decline.

Continued collaboration
Natura says it will continue to operate under both brands in the Latin American market, even in a possible split. The company believes continuity guarantees Natura and Avon’s integration and cooperation in the market. For example, Avon can continue to be present in other international markets while profiting from sales in Latin America thanks to a business partnership with Natura.

This business exploration follows recent divestments based on simplifying operations. In April last year, L’Oréal acquired Aesop for an enterprise value of US$2.53 billion.

The Body Shop was sold to international private equity group Aurelius in November. The sale was valued at £207 million (US$258 million). Last week, The Body Shop reportedly signed an agreement to sell parts of its Europe and Asia business under Aurelius’s ownership.

By Venya Patel

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