Cosmetics company Avon Products, Inc. (NYSE:AVP) has been one of the biggest gainers this year, with AVP stock surging by as much as 150% over the course of 2019 so far. The reason behind the stock’s rise is twofold. After years of poor results, the company announced back in January that it was going to restructure its business extensively. However, that was simply the first step, as it then agreed to be acquired. Once the news of the restructuring was announced, the company’s stock surged by as much as 54% back in January.
Developments So Far
Restructuring was most likely done as a way to streamline the business significantly and reducing inventory, in order to make the company more palatable for an acquisition. Avon has also reduced its employee strength by as much as 10% at a global level. Once the acquisition news hit the wires, the stock surged with far bigger momentum.
That being said, it is important to point out that the AVP stock rise has not been completely smooth sailing, as the restructuring plans failed to produce the results that had been expected by investors. The disappointing earnings in the second quarter also caused the stock to shed much of its gains; however, the Chief Executive Officer of the company stated at the time he was pleased with some of the improvements that had been made at the time.
The news of the acquisition was revealed in May, when Avon Products announced that it was going to be acquired in an all-stock deal by Brazilian company Natura Cosmeticos (OTC:NUACF) for around $2 billion. The acquisition news was one of the biggest triggers in the Avon stock hike, but investors should be aware that it still has to go through regulatory approval before being confirmed.
Experts believe that those who already invested in AVP stock could do well to actually take their gains and look for the next investment opportunity.
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