Avon Products is set to sell its 74.67 per cent ownership interest in the Avon Japan business to private investment company TPG Capital.
The decision to sell the majority stake for $US90 million falls in line with the company’s strategy to focus on direct selling markets. Avon Japan currently makes more than 50 per cent of sales through direct mail and a large portion of products sold are specific to Japan.
"We are pleased to conclude this agreement with TPG Capital as we further focus our investments on higher growth opportunities. While Japan is an important consumer market, our analysis indicates that we would need to commit significant additional investment in order to generate profitable growth in the near to intermediate term," says Andrea Jung, Avon's Chairman and Chief Executive Officer.
The deal is expected to be finalised by the end of 2010, and the sale of the shares includes Avon’s stake in the business and some intellectual property licences. Avon will also hand over rights to local formulas for use in Japan and the ownership of some trademarks including use of the Avon name for an agreed period.
Avon is sold in more than 100 countries through approximately 6.2 million sales representatives and has an annual turnover of more than $US10 billion.