Avon Products Inc. on Monday said it has struck a deal with Barington Capital Group LP that grants the activist investor final say in a new board appointment.
For its part, Barington will withdraw its bid to elect two opposing board members at the beauty company’s annual shareholder meeting in May.
The agreement enables Avon to sidestep a proxy fight with the shareholder group, which has built up a 3 percent stake in the struggling company. In a December 2015 letter to Avon’s chairman, Barington criticized the efforts of CEO Sheri McCoy and called for as much as $700 million in cost cuts over the next two years, with the aim of improving the company’s long-term value.
Avon just weeks later announced the sale of its North America business in a $605 million deal with Cerberus Capital Management LP. The private-equity firm acquired an 80.1 percent stake in Avon North America, which it subsequently took private, as well as a 16.6 percent stake in Avon Products Inc. The deal also extended to Avon’s board, which following the departure of six sitting members would gain three Cerberus directors and two more joint appointees.
“We have spent time with Avon’s management team and members of the Board discussing our strategic and operational suggestions, and we are confident that Avon is taking the necessary actions to improve the long-term performance of the company,” James Mitarotonda, Barington’s Chairman and CEO, said in a statement.
Mitarotonda also expressed the group’s support of Cathy Ross, a joint appointment named by Avon and Cerberus on Monday. Ross, a former FedEx Express executive whose accomplishments include an overhaul of the company’s cost structure, will stand for election in May alongside the independent director to be approved by Barington.