1. | What is happening? |
●
|
In May 2019, Avon’s and Natura &Co’s Boards reached an agreement on the terms of an offer to combine the two companies.
|
|
●
|
The closing of the transaction is conditioned on, among other things, Avon and Natura &Co shareholder approvals and receiving certain regulatory approvals. This process is expected to complete in early 2020, following which the
two companies will be integrated.
|
|
●
|
Whilst we await completion of the deal, it is business as usual for both companies. We will continue to work with partners, clients and suppliers to deliver efficient and effective services across our operations.
|
2. |
Why is Avon combining with Natura &Co? How does this fit into our strategy?
|
●
|
The combination of Avon and Natura &Co will create a leading direct-to-consumer global beauty company that leverages each of Avon’s and Natura &Co’s complementary strengths and purpose.
|
|
●
|
Together, we will become the world’s fourth-largest pure play beauty company and a leader in direct-to-consumer, with combined gross revenues of over $10 billion.
|
|
●
|
The combined company will have a diverse portfolio of complementary products and will benefit from a strengthened presence in core markets in Brazil and Latin America and an expanded platform for growth in Europe, the Middle East and
Africa (EMEA) and Asia Pacific.
|
|
●
|
Natura &Co is an excellent cultural fit with Avon. Both companies have strong track records of positive social and community engagement, in particular a commitment to sustainability, doing right by our people and our communities
and the empowerment of women. Together, we will be able to support and advance these values.
|
3. |
Who is Natura &Co?
|
●
|
Natura &Co is a global cosmetics group comprising three iconic brands (Natura, The Body Shop and Aesop) aligned behind the purpose of nurturing a better way of living and doing business through beauty and relationships. They are
present in 73 countries across all continents and comprise more than 18,000 co-workers committed to generating a positive economic, social and environmental impact.
|
●
|
You can find out more about Natura &Co on their website https://naturaeco.com and read their 2018 Annual Report.
|
|
|
Natura |
|
|
Natura celebrated its 50th anniversary in August 2019. Founded in Brazil, the company also operates in Argentina, Chile, Colombia, France, Mexico, Peru and the United States. It has a network of 1.7 million consultants, 53 company-owned stores, and approximately 250 franchised stores, products in 3,500 stores and a market leading online platform in Brazil. |
|
|
|
|
|
The Body Shop |
|
|
The Body Shop has a global presence in 69 countries, with approximately 3,000 stores (about two-thirds of which are franchisees). The company has 12 distribution centres, 45 e-commerce websites and around 20,000 consultants. Recognised for its activism, the brand has been engaged in various causes, ranging from banning animal testing, through the promotion of the UN Sustainable Development Goals to humanitarian aid for refugees. |
|
|
|
|
|
Aesop |
Aesop is recognised for delivering exceptional products and experiences to its consumers. It operates in 25 countries, with 227 company-owned signature stores with unique designs; its products are also commercialised in 92 department stores. Aesop’s digital platform is in place in 17 countries and operates key partnerships with other online sales platforms. |
4. |
Is there any update on the transaction? How long will the integration take?
|
●
|
At the moment the transaction is still in progress as we work through the required regulatory and shareholder approvals.
|
|
●
|
Integration plans are at an early stage of development and an integration team that has been formed of senior representatives from both Avon and Natura &Co.
|
|
●
|
The team is starting to build out integration workstreams while observing all required restrictions since both companies must remain independent until closing.
|
|
●
|
Until then, we need to ensure we continue to work separately as separate companies.
|
|
●
|
We continue to make steady progress and are focused on ensuring that, once the transaction closes, the integration is as seamless as possible for all our stakeholders.
|
|
●
|
The integration efforts will be well thought out and carefully administered to ensure we retain the value of what both companies have built to date while also enjoying the benefits of synergies provided by the transaction.
|
|
●
|
While we cannot provide a specific timeframe, we expect to complete the transaction in early 2020.
|
|
●
|
We are committed to keeping you informed, and we will provide additional details as decisions are made.
|
5. |
Does this impact our commitment to our ‘Open up Avon’ strategy? Is this still a priority?
|
●
|
Over the past year, we have worked with focus and urgency on our new strategy, and the planned combination of Natura & Co and Avon is a testament to the effectiveness of these efforts and to their go-forward potential.
|
|
●
|
This combination will accelerate the delivery of our Open Up strategy.
|
|
●
|
Importantly, until the transaction closes, we will continue to operate and compete as a separate company and it is business as usual.
|
6. | What does this announcement mean for me? What can we expect between now and closing? |
●
|
This announcement is just the first step. Until the transaction is completed, which we expect to occur in early 2020, it will be business as usual at Avon.
|
|
●
|
Avon and Natura &Co will continue to operate and compete as independent companies.
|
7. | Will there be any changes to compensation and benefits? |
●
|
Until the transaction closes, we will continue to operate as a separate company, and it is business as usual, including with respect to compensation and benefits.
|
|
●
|
It is still early in the process, and additional details regarding salaries and benefits as part of the combined company will be worked out as part of our integration planning.
|
|
●
|
We are committed to keeping you informed, and we will provide additional detail as decisions are made.
|
8. | What happens to the Avon stock that I own? |
●
|
Under the terms of the agreement, a new Brazilian holding company has been be created.
|
|
●
|
Avon shareholders will receive, at their election, 0.600 Natura Holding shares or 0.300 ADSs (with each ADS representing two (2) Natura Holding shares) for each share of Avon common stock they own, which reflects a premium of
approximately 28% to Avon’s share price as of March 21, 2019.
|
|
●
|
Each Avon common shareholder will have the choice to receive Natura Holding ADRs traded on NYSE or Natura Holding shares traded on the Brazilian stock exchange
|
|
●
|
This represents an approximately 24% total (economic) ownership of the combined company.
|
|
●
|
As shareholders, you will also have the opportunity to benefit from the upside potential of the combined company.
|
9. |
What will happen to my restricted stock units and options?
|
●
|
At the closing of the transaction, outstanding restricted stock units will be converted to awards in the new holding company stock, and the same terms and conditions are expected to continue to apply.
|
|
●
|
Stock options will be cashed out and additional details will be forthcoming.
|
10. |
How will the transaction affect our Representatives?
|
●
|
The combination of Avon and Natura &Co is great news for our Representatives.
|
|
●
|
Together Avon and Natura &Co will create a bigger, stronger company with more opportunities and more support for our Reps and consultants.
|
|
●
|
Together, we will become the world’s fourth-largest pure play beauty company and a leader in direct-to-consumer, with combined gross revenues of over $10 billion.
|
|
●
|
They will benefit from the combined company’s relationship-selling expertise, as well as being part of a larger, broadly international organization that has the ability to provide a more advanced relationship selling platform, better
service infrastructure and combined product innovation and product portfolio.
|
|
●
|
Avon’s focus remains on helping our Representatives succeed and ensuring that they have the freedom to earn and learn on their own terms and in their own way.
|
11. |
How will the transaction affect relationships with suppliers / vendors / partners?
|
●
|
Until the transaction is completed, this announcement will have no impact on our suppliers, vendors or partners.
|
|
●
|
We will honour all contracts in place.
|
|
●
|
We do not expect this transaction to impact Avon’s day-to-day business operations or engagement with our suppliers, vendors or partners.
|
12. | Will there be cost savings as a result of the Transaction? |
●
|
Avon and Natura &Co believe that the Transaction brings together two leading companies with unique and complementary strengths.
|
|
●
|
Natura is also expected to realize approximately USD $195 million in net synergies and cost reductions, which are targeted to be achieved within approximately three years following the closing.
|
|
●
|
The net synergies and cost reductions are expected to be realized 35% in 2020, 80% in 2021 and 100% thereafter and are expected to arise from, among other factors, scale benefits, cost savings, and efficiency improvements, including
acceleration of existing cost reduction programs.
|
|
●
|
There will be expected one-time costs of achieving these synergies and cost reductions which are estimated to be approximately USD $125 million.
|
|
●
|
These saving estimates are based on the pro forma 2018 year-end financial position of the combined company and these figures exclude the existing cost reduction programs of Avon and Natura, which are independent of the transaction.
|
13. | Will Natura &Co keep current Avon offices open? Will I be asked to relocate? |
●
|
We anticipate that being a part of a larger organization will present exciting opportunities.
|
|
●
|
It is still early in the process, and there are many decisions that have yet to be made.
|
|
●
|
We will provide more information as we continue to work through details.
|
●
|
The combined company will have an enhanced presence in key geographies such as Brazil and Latin America.
|
14. | Do you anticipate any layoffs following the transaction? |
●
|
This transaction is about an exciting future. Our businesses are highly complementary and there are strong teams at both companies.
|
|
●
|
Overall, we expect there will be exciting opportunities for employees as part of a larger organization with multiple brands, channels, and a global footprint.
|
|
●
|
In the course of the integration-planning work, decisions will be made concerning organizational structure and design for the combined company, and we will continue to communicate with you throughout that process.
|
|
●
|
Until the transaction is completed, we will continue to operate and compete as separate companies, and it will be business as usual at Avon.
|
15. | Will there be changes to the organisation / leadership / headcount? |
●
|
No final decisions have been made about the future shape of our combined organisation.
|
|
●
|
We do know that combining our two organisations will create many opportunities for our associates and our business growth.
|
|
●
|
But we should also expect there may be some changes that will happen.
|
|
●
|
As and when decisions are made, we will communicate them as appropriate.
|
|
●
|
Right now, it remains business as usual, and we should continue to operate as two separate companies, remaining focused on delivering the Open Up Avon Strategy and 2019 results.
|
16. | Where will the combined company be headquartered and who will lead it? |
●
|
The Board of the combined company will consist of 13 members, 10 of whom will be designated by Natura &Co and three of whom will be designated by Avon.
|
|
●
|
Importantly, the combined company will bring together the significant strengths and quality of the workforce across both companies.
|
|
●
|
Beyond that, it is still early in the process, and there are many decisions that have yet to be made.
|
17. | What will be the name of the combined company? Where will the combined company be listed? |
●
|
As part of this transaction, a new Brazilian holding company, Natura &Co Holding S.A., has been created.
|
|
●
|
Upon closing, the new holding company´s common stock will be listed on BM&F Bovespa (B3) (the Brazilian Stock Exchange) and it will also have ADRs listed on the NYSE (New York Stock Exchange).
|
18. | What is an F-4 document? |
●
|
This document, also known as a joint proxy statement/prospectus provides information on the Merger Agreement.
|
●
|
It is required by the Securities and Exchange Commission (SEC) to support the registration of securities involving foreign private issuers in connection with exchange offers and business combinations.
|
|
●
|
It serves a number of functions including:
|
o
|
Serving as the proxy statement through which Avon will solicit votes to seek to obtain the Avon Shareholder Approval;
|
||
o
|
Informing holders of Avon Shares of the upcoming Avon Special Meeting at which Avon shareholders will vote on, among other things, the Transaction Proposal;
|
||
o
|
Providing details of the Merger Agreement and the consideration Avon shareholders will receive upon completion of the Transaction;
|
||
o
|
Serving as the prospectus by which Natura will issue shares to Avon common shareholders in connection with the
Transaction; and
|
||
o
|
Providing Avon shareholders with important details about Natura and their rights as potential holders of Natura or Natura ADS.
|
19. | Can we interact with the Natura &Co employees? |
●
|
You should not engage with Natura &Co employees before closing, unless a member of Avon’s executive leadership team asks you to do so in connection with the integration-planning work.
|
|
●
|
Until the transaction is completed, we will continue to act and compete as completely independent companies.
|
|
●
|
Avon and Natura continue to operate and compete as completely independent companies; we cannot begin integrating until the transaction is closed, which is expected to occur in the first quarter of 2020.
|
|
●
|
Avon and Natura each make their own business decisions, in the ordinary course.
|
|
●
|
Avon and Natura do not hold themselves out as a single entity in any way; joint contact with any Representatives, customers, suppliers, or any other parties, for marketing, advertising, or any other reason is
not permitted.
|
|
●
|
Avon associates should not engage in business discussions with Natura employees, unless a member of Avon’s executive leadership team asks you to do so in connection with the integration-planning work.
|
|
●
|
Avon should avoid “even the appearance” of coordination of our decisions with Natura, or of one party controlling the other party; if a meeting with a Natura employee is unplanned or at a DSA meeting, we may
not share any confidential information.
|
|
●
|
Avon associates must not share confidential information, like prices, bids, plans, costs, negotiations with suppliers, profits, plans, research, designs, or forecasts with anyone outside of Avon.
|
|
●
|
If you have any questions about this guidance, please contact any member of the Ethics & Compliance team.
|
20. |
How will we stay informed during the process?
|
●
|
We are committed to keeping you up to date and sharing information with you as soon as we are able.
|
●
|
This FAQ document will be updated regularly and along with any announcements and information can be found on Inside Avon.
|
|
●
|
If you have additional questions, please don’t hesitate to reach out to your manager.
|
|
●
|
Alternatively, you can send any questions in by email to: askaquestion@avon.com.
|
21. |
|
What do I do if I’m asked about the transaction by the media? |
●
|
As always, it is important that we speak with one voice.
|
|
●
|
Consistent with Avon’s media policy, do not communicate with media beyond the dissemination of any press releases.
|
|
●
|
Please forward any calls, texts or e-mails from the media or investors to Amy Greene at 845.369.2472 / 3435-2472 or amy.greene@avon.com, who is authorized to respond on the Company’s behalf.
|