Shares of Avon Products (AVP) are rising in early trading after the company reached an agreement with Barington Capital. The company also named a former FedEx (FDX) executive to its board.
WHAT’S NEW: This morning, beauty products maker Avon said it reached an agreement with an investor group led by Barington Capital in connection with Avon’s 2016 annual meeting of shareholders. Under the terms of the agreement, the group, which also includes NuOrion Partners, has been given the right to approve the appointment of an independent director to Avon’s board. The nominee will be jointly selected by the company and Cerberus Capital Management, which has a stake of about 16.6% in Avon as of March 1. Cerberus acquired about 80% of Avon’s North America business in early March. As part of the agreement, the Barington group, which owns over 3% of Avon shares, will withdraw its nominations for election to Avon’s board at the annual meeting and will vote all of its shares in favor of the nominees proposed by the Avon board. “We are pleased to have reached this settlement agreement with Barington, which allows us to avoid a potential proxy contest,” Chan Galbato, Avon’s non-executive chairman, commented in a statement. Avon also named Cathy Ross, a former Executive Vice President and CFO of FedEx Express, to its board, effective March 24.
WHAT’S NOTABLE: On March 14, Avon said it will cut about 2,500 jobs worldwide and move its corporate headquarters to the United Kingdom from New York. In December, Barington and NuOrion called for Avon to pursue $500M-$700M in cost cuts and also said they had “lost confidence” in Avon’s leadership.
PRICE ACTION: Avon is up almost 5% in early trading to $4.48. Despite a rally since January, shares have fallen about 43% over the last 12 months.
