Avon to Sell Parfums Stern Unit for $210 Million Cash
Avon Products, the target of takeover speculation in recent months, said Wednesday that it has agreed to sell its Parfums Stern fragrance unit for $210 million in cash to a company affiliated with Sanofi, a French concern that markets upscale perfumes and beauty products.
Parfums Stern handles fragrances, including Oscar de la Renta, Perry Ellis, Uninhibited by Cher and Deneuve.
New York-based Avon had said in September that it might sell Parfums Stern and Giorgio Beverly Hills, its other prestige fragrance subsidiary, and use the proceeds to reduce its $1-billion debt.
Earlier this month, Avon sold the Valentino fragrance, another Parfums Stern brand, back to the Valentino Group for $12.3 million.
Avon bought Parfums Stern in November, 1987. Parfums Stern’s annual sales have grown to more than $125 million this year from more than $100 million two years ago.
Michael Gould, president and chief executive of Parfums Stern and Santa Monica-based Giorgio Beverly Hills, said the Giorgio management group is continuing to try to work out a deal to buy the company.
Giorgio has an estimated $150 million in annual sales from Giorgio Beverly Hills, the flagship brand, and Red from Giorgio Beverly Hills.
“We have worked out quite a few details,” he said in a telephone interview.
One observer said Avon got a “terrific price” from Safrep, the Sanofi affiliate.
He added that the purchaser would probably see the best opportunities in the Oscar de la Renta and Perry Ellis lines.
In September, one analyst had estimated that Avon could get a total of $400 million for Parfums Stern and Giorgio Beverly Hills.
Sanofi, with yearly sales of more than $2 billion, markets Nina Ricci, Van Cleef & Arpels and Stendhal, among other brands.
It is part of the Societe Nationale Elf Acquitaine Group.
The ability to pay off some of its debt is viewed as crucial to Avon, which has frequently emerged as a takeover target.
Much of its stock has been bought up by investment groups.
On Tuesday, the Robert M. Bass Group, a Texas investment concern, said it and some partners hold 5.9% of Avon.
But an Avon spokesman said Bass had told Avon Chairman and Chief Executive James E. Preston that the purchases were made “for investment purposes only.”
Avon’s managers in the past week reaffirmed their desire to retain control after months of speculation and suggestions by analysts that the company might be hard-pressed to avoid a merger or a takeover.
In May, Amway Corp. made a $39-a-share bid for the company. Amway held a 10.3% stake with Minneapolis investor Irwin Jacobs and raised the bid to a “possible price” of $41 a share, or $2.2 billion, on Aug. 1.
Avon rejected both offers.
In addition, investment group Chartwell Associates holds at least a 6.9% stake.
It said it may propose a merger with Avon but has made no bid.
The Chartwell group is an alliance of oil heir Gordon Getty, the Fisher real estate family of New York and an executive of Mary Kay Corp., an Avon rival.
