Despite Avon Buyout, It Won’t Be: ‘Ding-Dong, Giorgio Calling’

In a case of Middle America meets Rodeo Drive, Avon Products said Tuesday it has agreed to buy Giorgio Inc. of Beverly Hills for $185 million in cash.

But no, the Avon Lady will not be peddling the $165-per-ounce Giorgio fragrance door to door. Giorgio will be operated as a separate company, selling its women’s and men’s fragrances and beauty products in 700 stores in the United States, an Avon spokesman said.

“The acquisition is a key element of Avon’s strategy to become a major presence in the retail fragrance business,” Avon Chairman and Chief Executive Hicks Waldron said in a statement. “Giorgio will allow us to reach a large consumer segment that we don’t currently serve.”

The fashionable Rodeo Drive boutique that started it all 25 years ago will be sold to co-owner Fred Hayman for an undisclosed amount, Avon said. He owns 51% of Giorgio, and his ex-wife Gale Hayman owns 49%. The two have been feuding over the business for more than two years.

The acquisition has been approved by Avon’s board of directors, and the sale is scheduled to close May 7. Negotiations continue “regarding Ms. Hayman’s remaining involvement in Giorgio’s fragrance business in a creative capacity,” Avon said.

Fred Hayman’s lawyer said the sale is expected to end all litigation between the Haymans. “Fred and Gale will be able to go about their affairs in peace,” said Marshall Grossman. “Fred Hayman feels very comfortable with the transaction and feels that Avon is a quality company and Giorgio will be in good hands.”

An Avon spokesman said it would be “premature” to discuss whether Giorgio President Michael Gould would remain in his position. When asked if he would continue as president, Gould said: “I hope so. That’s what my job is. No one has told me differently.”

Giorgio introduced its perfume in 1981, and it quickly became a leader in the competitive $4-billion-a-year fragrance business. Giorgio had 1986 sales of more than $100 million, which industry sources believe was little changed from the year before even though more stores carried the fragrance and cosmetics line in 1986.

An Avon spokesman declined to reveal Giorgio’s net income but added that the company is profitable. Giorgio recorded income of $20 million in 1986, according to court documents. In a lawsuit filed in January, Gale Hayman charged that net profits fell 46% last year, a claim that Grossman had branded “factually inaccurate.”

Giorgio has been for sale for nearly two years as the Haymans battled. The couple, who divorced in 1983, remained business partners, but their relationship began to deteriorate. In early 1985, Gale Hayman was ousted from the company. Several lawsuits followed.

Giorgio was nearly sold in January, 1986, to cosmetics giant Estee Lauder for $185 million, according to court filings, but the deal fell through.