Avon share prices yoyo on further investor speculation

Avon share prices rose by more than 6% in trading on Monday when it was revealed that the company’s chairman was in discussions with investors led by Barington Capital Group concerning the possibility of high level management changes and further cost cutting measures.

Barington representatives stepped in amidst growing concerns that discussions that were advancing last week concerning the sale of its North American business and an equity stake to Cerberus Capital Management would result in the company being significantly undervalued.

Barington execs seek to avoid fire sale​

Since then Barington executives, who represents Nurion Partners and a number of other Avon investors, have been putting pressure on Avon executives to restructure in an effort to avoid what they see as being a potential fire sale.

The executives have proposed cuts that would amount to $700m in annual savings, while a new management team would be charged with ensuring an injection into the company’s marketing strategy and innovation pipeline.

 “Avon’s 6 million sales representatives, the backbone of Avon, deserve a senior management team that can reinvigorate the company and introduce new products and marketing campaigns that will resonate with customers,"​ Barington executives  stated in a letter sent to the board of Avon last week.

Negotiations continue...​

Evidently the pressure appears to be working as Barington CEO James Mitaronda and Avon chairman Douglas Conant are now planning to meet for open discussions following months of pressures, a report in the Financial Times stated.

However, after positive initial reaction from investors on Monday, shares prices were down again by more than 8% at the close of trading on Tuesday, when they stood at $4.12.

Avon share prices fell to an all-time low of $2.15 on November 13, compared to a share price of $10.13 a year ago. The steep decline in share value reflects the company's poor financial performance, with sales falling by 20% in 2014.