Avon, Shareholder Sign Pact to End Lengthy Feud
The 18-month-old war between Avon Products Inc. and Chartwell Associates LP ended Tuesday as the cosmetic maker and its dissident shareholder signed a standstill agreement, the corporate equivalent of a cease-fire.
Under the 10-year agreement, Chartwell is ending its proxy fight for four seats on Avon’s board, and both are dropping all lawsuits against each other.
Two members of Chartwell will remain on Avon’s board, but Richard Fisher, a Chartwell managing partner, said: “We expect to have a constructive and profitable relationship with Avon.”
Chartwell agreed not to increase its Avon holdings beyond 4.9%. It also promised not to propose any extraordinary transaction, such as a tender offer to shareholders, or participate in another proxy battle against Avon management.
The agreement further restricts Chartwell from trying to take control of or influencing the management of Avon, which owns the Santa Monica-based fragrance firm Giorgio Beverly Hills.
Such standstill agreements are common between management and dissidents who have decided to end their disputes.
In return for Chartwell’s concessions, Avon agreed to pay the partnership $7 million for the latter’s expenses.
Tuesday’s agreement came as little surprise after Chartwell’s power was eroded during the past month by its sale of 10 million shares of Avon stock and by agreements Avon management reached with other big stockholders.
