December 17, 2015 -- Avon Products, Inc., a leading global beauty company, and Cerberus Capital Management, a New York-based private investment firm, today announced that they have signed definitive agreements to deliver long-term value to Avon shareholders. Cravath, Swaine & Moore LLP is representing Avon in connection with these transactions. 

The partnership, which has been approved by the Avon Board of Directors, includes a $605 million equity investment by affiliates of Cerberus consisting of two components:

(1) Cerberus will make a $435 million investment in Avon Products. This investment will be in the form of convertible perpetual preferred stock with a conversion price of $5.00 per share and a dividend that accrues, or is payable at Avon's option under certain circumstances in common shares or cash, at a rate of 5% per annum. The conversion price represents a 46% premium to the 30-day volume-weighted average price.

(2) Avon North America will be separated from Avon Products into a privately-held company majority-owned and managed by Cerberus. Cerberus will purchase an 80.1% interest in Avon North America in exchange for a $170 million equity investment. Avon North America will also assume approximately $230 million of long-term liabilities from Avon Products, which will be partially offset by a $100 million cash contribution from Avon.

The Cravath team is being led by partners Jonathan L. Davis and Scott A. Barshay and includes associates Mark Mushkin, Eric M. Wasserstrum and Andrew T. Murphy (M&A); partner Andrew J. Pitts (securities); partner Eric W. Hilfers, practice area attorney M. C. Tania Balthazaar and associate Daniel P. Herrmann (executive compensation and benefits); partner J. Leonard Teti II and associates Tara L. Rhoades, Kara L. Mungovan and June Hwang (tax); partner David J. Kappos, senior attorney Margot A. Wagner and associate Christopher P. Davis (intellectual property); partner Matthew Morreale (environmental); partner Christine A. Varney and associate Caitlin N. Fitzpatrick (antitrust); practice area attorney Brian M. Budnick (real estate); and partners Evan R. Chesler and Benjamin Gruenstein and associate Dana Roizen (litigation). Daniel S. Connelly, Christopher C. Blackburn and Sarah R. Jacobson also worked on M&A matters and Peretz Riesenberg also worked on executive compensation and benefits matters.