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Chartwell Sells Most of Its Avon Shares

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From Associated Press

A powerful dissident stockholder in Avon Products Inc. sold 10 million shares of the company Thursday to the large Wall Street brokerage Salomon Bros. Inc.

Chartwell Associates’ sale appeared to free Avon from protracted wrangling with the investment group, which has dogged the world’s largest door-to-door marketer of cosmetics for a year.

Although Chartwell retains a small stake and said it will continue to try to expand its role, analysts doubted that the group will wield much influence over Avon’s future.

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“They can continue to fight, but they just lost a lot of their leverage,” said Allan Mottus, a New York marketing consultant who publishes a health- and beauty-care industry newsletter.

The sale reduced Chartwell’s stake to about 3.5% from 16.8% of Avon’s voting stock.

Chartwell declined to give a reason for the sale. It has been wrestling with Avon management since last year, when it started buying large blocks of Avon stock and sought seats on the board, contending that the company wasn’t being run properly.

Analysts said that when Chartwell’s financing costs were thrown in, the group broke even on the sale.

During the past year the investment group spent $449.7 million to acquire the majority of its 12.6 million Avon shares, or about $36 a share.

The price that Chartwell obtained at Thursday’s sale was $39.50 a share. Excluding commission costs for brokers, analysts said the $3.50-per-share profit was apparently enough to cover Chartwell’s financing costs.

An industry source said Salomon Bros. sold a portion of the 10 million shares to three institutional investors. Avon said it wasn’t a buyer of the stock but otherwise declined to comment.

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A Salomon spokeswoman would not confirm or deny the brokerage’s purchase or sale of Avon shares.

Avon stock finished at $41.75 a share on the New York Stock Exchange, unchanged from Wednesday’s close.

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