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September 17, 2019

LG H&H closes $125m acquisition of New Avon

PUBLISHED : August 16, 2019 - 14:52

UPDATED : August 16, 2019 - 14:54

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Seoul-based LG Household & Health Care said on Aug. 16 that it had closed a stake purchase deal in US beauty and personal care product maker New Avon for $125 million in cash.

Under the transaction, LG H&H had bought New Avon’s entirety -- 1 million shares from US private equity Cerberus Capital Management and UK-based Avon Products. Cerberus paid $170 million for some 80 percent ownership in New Avon in March 2016. Avon Products owned the remaining 20 percent stake.

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The transaction came about a month prior to the deadline on Sept. 30. The $125 million acquisition deal was approved by LG H&H’s board of directors on April 25.

The funding for the acquisition will be solely sourced from LG H&H’s assets. The company has accrued substantial cash reserves.

LG H&H, a beauty product arm of electronics-to-chemical LG conglomerate, said the acquisition is designed to give it a foothold in its foray into the US market. The group’s holding firm LG Corp. owns a 34.03 percent stake in LG H&H.

New Avon was split off from Avon Products in 2016 and has since served North American customers for products ranging from skincare products, fragrances and fashion accessories. The company does not disclose its financial reading to public, but has reportedly failed to turn around and move away from reliance on its door-to-door sales network.

Avon Products in January sold its manufacturing site in Guangzhou, China for $71 million to LG H&H subsidiary TheFaceShop.

LG H&H has overseas operations in China, Japan, Taiwan, Hong Kong, Canada, US and Southeast Asian countries such as Vietnam, Singapore, Thailand and Malaysia.

By Son Ji-hyoung (consnow@heraldcorp.com)

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