NEW YORK (AP) -- Beauty company Avon Products Inc. is selling its majority stake in a Japanese unit to an affiliate of private investment firm TPG Capital for about $90 million.
Avon said Monday the sale fits with its strategy of focusing on direct selling markets with higher growth potential. More than half of Avon Japan's sales are from direct mail, with many sales coming from products that at specific to Japan.
"While Japan is an important consumer market, our analysis indicates that we would need to commit significant additional investment in order to generate profitable growth in the near to intermediate term," Avon Chairman and CEO Andrea Jung said in a statement.
Avon also said that TPG's payment is for its interest in the business as well as for pre-paid royalties for certain intellectual property licenses.
The deal gives TPG rights to Avon's local Japan formulas and products and certain other formulas and products for use in the country. TPG can also use some formulas and products outside of Japan under certain limitations. Avon will transfer to TPG ownership of certain local Japan and other trademarks. TPG will also have rights to use the Avon name in Japan for a certain period of time.
TPG is starting a tender offer for all outstanding shares of Avon Japan at 74 yen ($91.20) per share. The sale of Avon's stake in the unit is not conditional on TPG buying the remaining shares in the division.
The sale is expected to close in the fourth quarter.
Avon Japan, which makes up less than 2 percent of Avon's total company sales, is publicly traded in Japan on the Jasdaq market.
Last month Avon reported that its third-quarter earnings climbed, but missed expectations because it spent more on advertising, and revenue from China declined.
