Avon Products Inc. rose 7 percent after the Wall Street Journal reported that the cosmetics retailer was in advanced talks to sell its North American business and an equity stake to Cerberus Capital Management.
The shares climbed to $3.99 at the close of trading in New York. Still, Avon has slid 58 percent this year.
Avon and the New York-based private equity firm are aiming to agree to a deal this month, the newspaper said, citing people it didn’t name. Lindsay Fox, a spokeswoman for Avon, didn’t immediately return messages left by Bloomberg.
The report renewed optimism that investors may be able to wring some value from Avon shares, which have been pummeled by three years of losses and the waning effectiveness of its door-to-door sales model. New York-based Avon also has struggled recently with currency fluctuations and a new industrial production tax in Brazil, resulting in an unexpected loss last quarter.
Activist shareholders have built a 3 percent stake in Avon, according to the Journal, citing people it didn’t name. The activists say Avon doesn’t need cash from a private equity investor and still can improve its operations, according to the newspaper.
While activists would oppose a deal at current prices, they could support a purchase at a higher level and coupled with management changes, according to the report. The activists, including NuOrion Partners and Barington Capital Partners, plan to start a public campaign this week, the report said.