P.M. BRIEFING : Avon to Sell Japanese Interest

Avon Products Inc., battling an unwanted takeover bid, said today it will sell its 60% stake in Avon Japan for $338 million in cash and use the proceeds to further reduce its debt.

The buyer, Friends of Freesia Co. of Tokyo, also has agreed to prepay $70 million in royalties and prepay another $42 million in royalties 18 months after the close of the transaction, Avon said.

Avon said it will receive 5% in royalties on all Avon products sold by Avon Japan for 18 months and 3% in royalties thereafter.

The door-to-door cosmetics company, facing a proxy battle launched by an investor group that includes a member of the Getty oil family, executives of cosmetics rival Mary Kay Cosmetics Inc. and the Fisher real estate family, has cut its $1.1-billion debt by about $500 million in the last year, a spokesman said.

Avon has maintained a desire to remain independent in the face of several takeover overtures during the last several months.