Avon Products has announced that it has entered into an agreement with Rhinestone Holdings, which will acquire Avon's jewelry business, Silpada Designs.
The deal was made for $85 million, in an all-cash transaction, plus an earn-out of up to $15 million if Silpada achieves specific earnings targets over two years. The transaction is expected to close July 3, 2013.
Stabilizing Avon’s U.S. business is a top priority in our turnaround efforts,” said Avon Chief Executive Officer Sheri McCoy. “Divesting Silpada is an important step in our plan and will enable us to focus our resources on the core Avon business."
Avon expects to record a non-cash charge of approximately $80 million pre-tax (approximately $50 million net of tax), reflecting the estimated loss on sale, in the second quarter of 2013. Avon expects that the proceeds from the sale will be used for general corporate purposes, including the re-payment of outstanding debt, further strengthening the company's balance sheet.