The shares of Avon Products (NYSE:AVP ) are trading higher today after announcing its agreement with an investor group led by Barington Capital to prevent a proxy fight during its 2016 Annual Shareholders Meeting.
Barrington Capital, NuOrion Partners and certain investors collectively own more than 3% of the outstanding shares of the company.
The stock price of Avon Products climbed more than 7% to $4.60 per share at the time of this writing around 12:51 in the afternoon in New York.
Avon Products’ agreement with Barrington Capital
Avon Products agreed to grant Barington Capital the right to approve the appointment of an independent director to the company’s Board. Barington Capital and Cerberus Capital will jointly select the independent director.
In December, Avon Products entered into a strategic partnership agreement with Cerberus Capital to separate the company’s North American business into a privately-held company, which is majority-owned (80%) and managed by an affiliate of the private equity firm. Avon Products still owns 20% stake in its North American business.
Barington Capital agreed to withdraw its nominees and to vote its shares in favor of the nominees of the company’s Board. Its Chairman and CEO James Mitarotonda said, “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.”
On the other hand, Avon Products Non-Executive Chairman Chan Galbato said, “We are pleased to have reached this settlement agreement with Barrington, which allows us to avoid a potential proxy contest. We have a process underway to identify the additional independent Board member and we look forward to working with Barington to complete that process.”
Galbato added that the company has a process to identify the additional independent director, and the company’s Board and management team would continue to execute its transformation plan for the benefit of all shareholders.
Avon Products appoints Cathy Ross to its Board
Avon Products also announced the appointment of Cathy Ross to its Board of Directors. She will serve on the Audit Committee of the Board and will stand for election at company Annual Meeting. Ross previously served as Executive Vice President and CFO of FedEX Express.
According to Mitarotonda, his firm supported the appointment of Ross to the company’s Board. He said, “We are also pleased that the company is actively strengthening its Board with the recent reconstitution and the addition of Cerberus representatives. We supported the appointment of Cathy Ross, who was announced this morning.
“We believe these are all positive developments regarding the direction of Avon and look forward to providing whatever assistance we can to help the company,” he added.
