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Seven firms in Natura’s US$2 billion landmark acquisition of Avon

Por: Latin LawyerImprimirVisualizar em PDF

The deal creates the world's fourth-largest cosmetics group and the largest global door-to-door sales cosmetics business.

Natura's founding shareholders hired São Paulo firm Tudisco, Rodrigues & Junqueira Advogados.

Avon relied on Cravath, Swaine & Moore LLP in New York and Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados in São Paulo.

Baker McKenzie LLP in Chicago and New York and Trench Rossi Watanabe in São Paulo also advised Natura on tax matters. Sullivan & Cromwell LLP in New York represented Goldman Sachs, which acted as a financial advisor to Natura.

The deal was signed on 22 May and is expected to close in early 2020, following approval from antitrust authorities.

The acquisition will be made through a share swap, which will result in the formation of a holding company, named Natura Holding. Natura's current shareholders will hold a 76% stake in the combined holding, while Avon's existing shareholders will retain a 24% stake. Natura Holding's board of directors will consist of 13 members, three of whom will be picked by Avon. Its shares will be listed on B3's Mercado Novo segment, which is accessible to certain qualified investors. Its American depositary shares will be listed on the NYSE.

The new company is valued US$11 billion, while the deal considered Avon's market value at US$3.7 billion.

Avon was founded in 1886 in the US, but moved its headquarters to the UK in 2016. The company became popular by using female representatives to sell its products door-to-door. It established itself as a widespread source of income for housewives during the last century. More recently, it has faced increased competition from internet sales and companies adopting a similar door-to-door sales approach.

In Brazil, where Avon has around 2.2 million representatives, Natura was one such competitor, with many people selling products for both companies. After the merger, Natura and Avon will have some 6.3 million registered representatives worldwide.

Natura, which was founded in 1969, is much younger than Avon, but it has grown steadily in a small period. It owns British brand The Body Shop, which it acquired in 2017, and Australian cosmetics company Aesop, which it bought in 2013. The business has an annual revenue of US$10 billion. It began as a small shop in São Paulo, but became a national titan in the late 1970s after it adopted the Avon-inspired sales approach. It madeits IPO in 2004.

Natura was a pioneer of social responsibility and environmentally friendly policies in Brazil, introducing a programme to neutralise its carbon footprint more than a decade ago.

Counsel to Natura

Davis Polk & Wardwell LLP
Partners Daniel Brass, Edmond FitzGerald and Frank Azzopardi, and associates Albert Zhu, Michael Senders, Joseph Brown and Jesse Hallock in New York; partner Manuel Garciadiaz and associate Konstantinos Papadopoulos in São Paulo

Pinheiro Neto Advogados
Partners Henrique Lang, Guilherme Monteiro, Renê Medrado and Flávio Veitzman, and associates Camila Carvalho Gomes, Gustavo Crêdo, Luís Henrique Perroni Fernandes, Frederico Menescal Rocha and Diego Alves Amaral Batista in São Paulo

For tax only

Baker McKenzie LLP
Partners Matthew Hayes and Jeff Maydew in Chicago; partner Thomas May in New York

Trench Rossi Watanabe
Partners Simone Musa and Reinaldo Ravelli, and associates Luciana Nóbrega, Luciana Souza and Felipe Calil in São Paulo

Counsel to Natura founding shareholders

Tudisco, Rodrigues & Junqueira Advogados
Partners Lavinia Junqueira, and associates Cristiane Ie and Victor Baccega

Counsel to Avon 

Cravath, Swaine & Moore LLP
Partners Ting Chen, Eric Hilfers, David Kappos, Leonard Teti II and Matthew Morreale, and associates Matthew Kelly, Sarah Jacobson, Catriela Cohen, Shaylyn Harper, Ari Buffer, Tania Balthazaar, Christopher Gonnella, Miling Harrington, Somi Umolu, Kiran Sheffrin, Andrew Mandelbaum, Jesse Weiss and Brian Budnick in New York

Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
Partners Moacir Zilbovicius, Gil Falleiros Mendes, Maria Ferndanda de Almeida Prado e Silva, Marcio Soares and Amadeu Carvalhaes Ribeiro, and associate Carolina Amadeu Vasconcelos Rossini in São Paulo

Counsel to Goldman Sachs 

Sullivan & Cromwell LLP
Partner Stephen Kotran and associate Lee Parnes in New York

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