Natura Cosméticos S.A. (BOVESPA:NTCO3) entered into an agreement to acquire Avon Products, Inc. (NYSE:AVP) from a group of shareholders for $1.9 billion on May 22, 2019. Pursuant to the transaction, a new holding company, Natura Holding S.A., will wholly own the shares of Natura Cosméticos and Avon Products. Under the terms of the transaction, each share of Natura Cosméticos will be exchanged for one share of Natura Holding S.A. and each share of common stock of Avon Products will be converted into, at the election of each holder, 0.3 American Depositary Shares (ADS) of Natura Holding S.A. on NYSE or 0.3 shares of Natura Holding S.A. listed on B3 stock exchange in Brazil. The shares of Avon Products' series C preferred stock shall be converted into the right to receive an aggregate cash consideration of approximately $530 million. Each award of restricted stock units (RSU) of Avon Products with respect to Avon Products' common stock will be converted into an award of restricted stock units with respect to a number of shares of Natura Holding S.A. equal to the product of the number of shares of Avon Products' common stock subject to such RSU and the exchange ratio of 0.3. Similarly, each award of performance contingent restricted stock units (PSU) with respect to Avon Products' common stock be will converted into an award of restricted stock units that is subject solely to time-based vesting with respect to a number of shares of Natura Holding S.A. equal to the product of the number of shares of common stock of Avon Products subject to such PSU immediately prior to the closing and the exchange ratio of 0.3. Each share of Avon Products' common stock that is subject to an award of restricted common stock of Avon Products shall be converted into restricted stock of Natura Holding S.A. The options and stock appreciation rights (SAR) of Avon Products shall be cancelled and Avon Products will pay to the holders an amount in cash, determined by multiplying the excess, if any, of the closing price of a share of Avon Products on the NYSE composite tape on the closing date over the per share exercise price of such option or SAR by the number of shares of common stock underlying such Option or SAR as of immediately prior to the closing. Upon closing, the shareholders of Natura Cosméticos will own approximately 76% of Natura Holding S.A., while Avon Products' shareholders will own approximately 24% and Natura Holding S.A. will have stock listed on the B3 stock exchange in Brazil under the Novo Mercado segment and ADS traded on the New York Stock Exchange.

Natura Cosméticos has secured committed financing with Banco Bradesco S.A., Citigroup Global Markets Inc. and Itaú Unibanco S.A. in an aggregate principal amount of up to $1.6 billion, to finance the consideration payable to holders of Avon Products' series C preferred stock as well as certain payments that could be required under certain indebtedness as a result of the transaction. The agreement includes a termination fee of $78.6 million payable by Avon Products and $242 million payable by Natura Cosméticos. Upon closing, the Board of Directors of Natura Holding S.A. will consist of 13 members, 3 of which will be designated by Avon Products. Goldman Sachs International and PJT Partners LP issued an opinion that the consideration is fair from a financial point of view. Natura Cosméticos entered into a voting and support agreement with Cleveland Apple Investor L.P., 0.44 million holder of series C preferred stock of Avon Products and certain of its founding shareholders holding 50.5% stake in Avon Products, wherein they agreed to exercise their voting rights so as to implement the actions required for closing. Natura Cosméticos intends to form a Special Independent Committee to negotiate the share exchange ratio for merger with Natura Holding S.A.

The transaction is subject to approval by the shareholders of Avon Products and Natura Cosméticos, approval for listing of shares issued as consideration, approval by antitrust authorities in Brazil and in other applicable jurisdictions, Form F-4 and the Form F-6 each having become effective, all required governmental approvals having been obtained, completion of restructuring of Natura Cosméticos involving merger of Natura Cosméticos into Natura Holding S.A. in exchange for shares of Natura Holding S.A. The transaction has been unanimously approved by the Board of Directors of Avon Products and by the Board of Directors of Natura Cosméticos. The Board of Directors of Avon Products recommended that the shareholders approve the transaction. As of July 19, 2019, Avon scheduled the special meeting for approval from its shareholders. The shareholder meeting is scheduled on November 13, 2019. As of September 5, 2019, South Africa's Competition Commission conditionally approved the transaction. As of September 25, 2019, the transaction has been approved by Brazilian Securities Commission (CVM). As of September 30, 2019, the U.S. Securities and Exchange Commission has declared effective Natura &Co Holding S.A. registration statement on Form-4. As of November 6, 2019, the transaction has been approved by the Administrative Council for Economic Defense (CADE) in Brazil. As of November 13, 2019, the transaction was approved by the shareholders of Avon and Natura. As of November 14, 2019, The Board of Directors of Natura &Co shall meet on December 16, 2019 to confirm the fulfillment of the conditions precedent of the Merger of Shares. As of December 16, 2019, the transaction was approved by the European Commission. As of December 19, 2019, the transaction is approved by Mexican Federal Economic Competition Commission. The transaction is expected to be completed in early 2020. As of December 19, 2020, closing of the transaction is expected on January 3, 2020.

Henrique Lang, Guilherme Monteiro, Renê G. S. Medrado, Flavio Veitzman, Camila Carvalho Gomes, Gustavo Crêdo, Diego Alves Amaral Batista, Luis Henrique Perroni Fernandes and Frederico A. Menescal C. Rocha of Pinheiro Neto Advogados and Daniel Brass, Albert Zhu, Michael Senders, Manuel Garciadiaz, Konstantinos Papadopoulos, Edmond T. FitzGerald, Joseph S. Brown, Howard Shelanski, Frank J. Azzopardi, Jesse L. Hallock of Davis Polk & Wardwell LLP acted as legal advisors for Natura Cosméticos S.A. Ting S. Chen of Cravath, Swaine & Moore LLP and Scott A. Barshay, Jeffrey Samuels, Patricia Vaz de Almeida, Alyssa f. Wolpin and Justin Rosenberg of Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors for Avon Products. Goldman Sachs International and PJT Partners LP acted as financial advisors for Avon Products. UBS Investment Bank and Morgan Stanley acted as financial advisors to Natura Cosméticos. BofA Merrill Lynch acted as financial advisor for Avon Products. Simone Dias Musa, Reinaldo Ravelli, Luciana Nobrega, Luciana de Souza and Felipe K. Calil of Trench Rossi E Watanabe Advogados. acted as legal advisor to Natura Cosméticos S.A. Matthew Hayes, Jeff Maydew and Thomas R. May of Baker & McKenzie LLP acted as legal advisor to Natura Cosméticos S.A. Moacir Zilbovicius, Gil Mendes, Maria Fernanda de Almeida Prado e Silva, Marcio Dias Soares, Amadeu Carvalhaes Ribeiro and Carolina Amadeu Vasconcelos Rossini of Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados acted as legal advisor to Avon Products, Inc. Matthew Lovell, Douglas Ryder, Eric L. Schiele, Dvir Oren and Jacob Hansen of Kirkland & Ellis LLP acted as legal advisor to Cerberus Capital Management. Lavinia Junqueira, Cristiane Ie and Victor Baccega of Tudisco, Rodrigues & Junqueira acted as legal advisor to the funding shareholders of Natura Cosméticos S.A. Lazard acted as financial advisor to Natura Cosméticos S.A in the transaction. Gibson, Dunn & Crutcher LLP acted as the legal advisor to PJT Partners. Computershare Trust Company, NA acted as transfer agent for Avon. Avon will pay a fee of approximately $27 million to Goldman Sachs.

Natura Cosméticos S.A. (BOVESPA:NTCO3) completed the acquisition of Avon Products, Inc. (NYSE:AVP) from a group of shareholders on January 3, 2020. Roberto Marques, Executive Chairman of Natura &Co will be taking over the leadership of Avon from Jan Zijderveld, former Chief Executive Officer of Avon Products.