AVP stock is one of the biggest gainers in today’s session on the news that Brazil’s Natura Cosmeticos SA agreed to buy rival Avon Products Inc. (NYSE:AVP) in an all-stock deal
US cosmetics giant Avon Products has been one of the world’s leading brands for decades and in a new development, the company is all set to be acquired by Brazilian behemoth Natura Cosmeticos SA. The Brazilian company has made a name for itself in the world of cosmetics as one of the leading makeup brands and today it got closer to acquiring the US company in an all-stock deal at about $2 billion, that could make Natura one of the world’s biggest cosmetic companies.
AVP stock Soars
According to several reports, the companies are now close to completing the deal that would see the Brazilian company acquiring a majority stake in the iconic US company, which was established back in 1886. Avon has a market capitalization of $1.4 billion and over the course of its storied history; the company has driven its revenues through the direct sales route. After the news of the deal broke, the AVP stock started soaring and at one point went up by as much as 13%.
According to a report in a leading financial daily, Naturo values Avon at $2 billion and once the two companies are combined, the Brazilian group would own 76% of the new entity. If such a valuation is actually accorded to Naturo then, analysts believe that the combined group would have earnings to the tune of $3.35 billion before interest, taxes, depreciation, and amortization.
The Brazilian company has been on a bit of an acquisition fee over the past few years and its previous acquisition comprised of L’Oreal’s The Body Shop, which Naturo purchased for $1 billion. One thing that should be a cause of concern for Naturo is the fact that Avon already has a strong presence in Brazil and it remains to be seen if the American company’s products end up competing with Naturo’s original products.
AVP stock is trading at $3.78, represents a gain of 6.80% after hitting a 52-week high of $3.98 earlier in the session.
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