Beauty Giant Natura Gets $1 Billion to Boost Avon Turnaround

(Bloomberg) — Cosmetics maker Natura & Co Holding SA raised 5.61 billion reais ($1 billion) in an equity sale that will help it make the most out of its purchase of Avon Products Inc.

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Bottles sit on a table at the Natura Cosmeticos SA production facility in the town of Cajamar, Sao Paulo State, Brazil, on Wednesday, June 28, 2017. British make-up seller Body Shop from L’Oreal SA has been sold to Natura Cosmeticos SA with a deal that estimates to be worth 1 billion euros ($1.1 billion).

The Sao Paulo-based firm sold 121.4 million voting shares at 46.25 reais apiece, according to a filing, confirming an earlier report by Bloomberg. Stock rose as much as 1.7% in early trading Friday before paring gains.

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Key Insights

Natura, which is also the owner of the brands Natura, Body Shop and Aesop, will use proceeds for cutting debt and investments tied to its digital channels, geographic expansion and Avon’s integrationThe firm’s ability to turn around Avon’s operations is still seen as one of the top risks by analysts and investorsThe deal was priced at a 1.6% discount to Thursday’s close

Digging Deeper

Morgan Stanley was the lead underwriter, while Bank of America, Bradesco BBI, Citi and Itau BBA also ran the dealThis is the second time Natura raised money with investors this year: in the second quarter, the firm announced a 2 billion-real private capital increase aimed at strengthening its cash reserves amid the pandemicThe company ended the second quarter with net debt of 10.6 billion reais and a cash position of 7.4 billion reais

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Beauty Giant Natura Eyes China Expansion as Online Sales SurgeBrazil’s Natura Wants to Take Rainforest Chic Global With Avon

(Updates with stock move in second paragraph.)

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