The Brazilian cosmetics maker Natura announced Wednesday that it is buying Avon Products in an all-stock deal that it valued at $3.7 billion, in move that would create the world's fourth-largest group of beauty products.
Shareholders of both companies would have to approve the deal. Natura said a holding company would be created, with 76% of the shares going to current Natura stockholders and 24% to Avon's. Natura expects to conclude the deal in the beginning of 2020.
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Founded in 1969 in the small city of Cajamar, outside Sao Paulo, Natura said the purchase of the American rival fits in its objective of building a brand with global reach. The Brazilian company started with a door-to-door model similar to Avon's, but recently bought retail stores like The Body Shop.
Natura said the combination of the two companies would have gross revenue above $10 billion a year and employ more than 40,000 people in 100 countries.
The deal could cut between $150 million and $250 million in costs, the Brazilian company said.
"Natura is taking a decisive step to build a global group, multibrand and multichannel," said Roberto Marques, CEO of the Brazilian company. "Together we will improve our growing digital capacity, our social network of representatives."
Avon CEO Jan Zijderveld said in the same statement that the deal marks a new and exciting chapter in the company's 130-year history.
"We will have broader access to innovation and to a portfolio of products, a stronger digital platform and electronic trade," Zijderveld said.
Natura's stock jumped almost 10% to 61.50 Brazilian reals ($15.22) a share on the Sao Paulo stock exchange because of rumors around the deal. Avon Products stock rose 9% to close at $3.49 on the New York Stock Exchange.
Associated Press writer Anna Jean Kaiser reported this story in Rio de Janeiro and AP writer Mauricio Savarese reported from Madrid.