Avon sells Silpada Designs jewellery unit for one-tenth of acquisition price
03 Jul 2013
Struggling beauty products company Avon Products Inc, yesterday said it would sell its loss-making Silpada Designs jewellery business back to its founders for $85 million in cash, three years after it acquired the unit for $650 million.
The deal also includes an earn-out payment of as much as $15 million if Silpada meets certain profit targets over a two-year period.
Silpada has been sold for one-tenth of its acquisition price to Rhinestone Holdings Inc, a newly formed entity owned by Bonnie Kelly and Teresa Walsh, who founded Silpada in 1997.
Avon's former CEO, Andrea Jung, had in April 2010 acquired Silpada in a $650 million deal, making it one of the company's largest acquisitions in years.
The New York-based beauty products company said it expects to take an $80 million pretax, noncash charge on the estimated loss from the sale.
"Divesting Silpada is an important step in our plan and will enable us to focus our resources on the core Avon business," said, Sheri McCoy, Avon's CEO.
McCoy, who is trying to turn the embattled company around after four years of declining profit, had said in February that the company was looking for alternatives for Silpada.
Avon said that it decided to divest Silpada because of the timeline and investment required to return the business to historical levels of profitability.