Just one week after a group of Avon shareholders called on the company to consider selling itself, the world’s leading direct selling beauty company has appointed a new CEO.
The shareholders, led by Shah Capital, Barington Capital Group and NuOrion Partners, sent a letter to Avon’s Board on January 29 calling on it “to promptly explore all strategic alternatives to maximise shareholder value, including a sale of the company in whole or in parts” as they were “extremely disappointed” with its “deteriorating” performance.
In the letter, the shareholders said they were also dismayed by the board’s failure to act quickly and decisively on its previous recommendations, including hiring a new CEO(a step t hat it first recommended “over two years ago”) to improve the company’s long-term performance.
“As a result, the shareholder group has lost confidence in the ability of Avon’s current board to create meaningful long-term value for its public shareholders, and sees no reason why shareholders should continue to wait for a turnaround from a board that has overseen a tremendous destruction of shareholder value.”
The shareholder group believes Avon would be highly attractive to a range of buyers due to its many positive attributes, including its well-known 130-year old brand; its vast product offering generating over US$5.7 billion in sales; its strong market positions in developing countries such as Brazil, Russia and Mexico; its owned manufacturing operations; and its six million direct sales representatives.
In addition, the group claims a multinational acquirer would immediately benefit from its ability to improve Avon’s capital structure and the tax efficiency of its operations.
“The shareholder group is convinced that a better capitalised strategic buyer would do a much better job of unlocking Avon’s tremendous value potential than the company’s current board.”
Three days ago (February 5) Avon announced that it has appointed Jan Zijderveld as its new CEO to replace Sheri McCoy who previously announced her intention to retire from the company in March.
Jan joins Avon from Unilever where he has had a 30-year career, living and working in seven countries across three continents. He most recently served as a member of Unilever’s executive committee, and as president of the company’s $14 billion European business.