UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549

 
FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported): November 5, 2019

 
AVON PRODUCTS, INC.
(Exact Name of Registrant as Specified in its Charter)

 
 
 
 
 
 
New York
 
001-04881
 
13-0544597
(State or Other Jurisdiction of
Incorporation)
 
 
(Commission File Number)
 
(IRS Employer
Identification No.)
 
Building 6, Chiswick Park
London W4 5HR
United Kingdom
(Address of Principal Executive Offices) (Zip Code)
 
+44-1604-232425
(Registrant’s Telephone Number, Including Area Code)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.25 per share
AVP
NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 1.01.
 
Entry into a Material Definitive Agreement.
 
Amendment Number Two to Merger Agreement
 
On November 5, 2019, Avon Products, Inc. (the “Company”) entered into Amendment Number Two (the “Second Amendment”) to the Agreement and Plan of Mergers (the “Merger Agreement”), dated May 22, 2019, among the Company, Natura Cosméticos S.A., a Brazilian corporation (sociedade anônima) (“Parent”), Natura &Co Holding S.A., a Brazilian corporation (sociedade anônima) (“HoldCo”), Nectarine Merger Sub I, Inc., a Delaware corporation and a wholly owned direct subsidiary of HoldCo (“Merger Sub I”), and Nectarine Merger Sub II, Inc., a Delaware corporation and a wholly owned direct subsidiary of Merger Sub I (“Merger Sub II”).

The Second Amendment provides that HoldCo will create a special equity reserve in connection with the contribution of shares of Parent common stock to HoldCo (the “Founders Contribution”) by the shareholders of Parent who have entered into the Natura Founders’ Voting and Support Agreement in connection with the Merger Agreement and who have executed joinders to such agreement (the “Founders”). The Second Amendment further provides that HoldCo will account for such special equity reserve in an amount net of any income tax liability of HoldCo, as was provided for in the Merger Agreement, but if HoldCo does not receive an endorsement of such accounting treatment from the Brazilian Securities Commission (Comissão de Valores Mobiliários) (the “CVM”) before the date of issuance of HoldCo’s financial statements for the fiscal year ended December 31, 2019, then HoldCo will instead account for such income tax liability within the profit and loss accounts of HoldCo. Furthermore, HoldCo has agreed to take any and all necessary actions, including making all necessary shareholder proposals and using reasonable best efforts to obtain all necessary shareholder approvals, to ensure that the balance of any and all accumulated losses is absorbed against the capital reserve formed upon the Founders Contribution.

The foregoing summary of the Second Amendment is qualified in its entirety by the full text of the Second Amendment, which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
  
Cautionary Statements for Purposes of the “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

Statements in this communication that are not historical facts or information may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Among other things, these forward looking statements may include statements regarding the proposed combination of the Company (“we” or “us”) and HoldCo (together with Parent, “Natura &Co”); our beliefs relating to value creation as a result of a potential combination with Natura &Co; the expected timetable for completing the transaction; benefits and synergies of the transaction; future opportunities for the combined company; and any other statements regarding the Company’s and Natura &Co’s future beliefs, expectations, plans, intentions, financial condition or performance. In some cases, words such as “estimate,” “project,” “forecast,” “plan,” “believe,” “may,” “expect,” “anticipate,” “intend,” “planned,” “potential,” “can,” “expectation,” “could,” “will,” “would” and similar expressions, or the negative of those expressions, may identify forward looking statements. They include, among other things, statements regarding our anticipated or expected results, future financial performance, various strategies and initiatives (including our transformation plan, Open Up Avon, stabilization strategies, cost savings initiatives, restructuring and other initiatives and related actions), costs and cost savings, competitive advantages, impairments, the impact of foreign currency, including devaluations, and other laws and regulations, government investigations, results of litigation, contingencies, taxes and tax rates, potential alliances or divestitures, liquidity, cash flow, uses of cash and financing, hedging and risk management strategies, pension, postretirement and incentive compensation plans, supply chain and the legal status of the representatives. Such forward-looking statements are based on management’s reasonable current assumptions, expectations, plans and forecasts regarding our current or future results and future business and economic conditions more generally. Such forward-looking statements involve risks, uncertainties and other factors, which may cause the actual results, levels of activity, performance or achievement of the Company to be materially different from any future results expressed or implied by such forward-looking statements, and there can be no assurance that actual results will not differ materially from management’s expectations. Therefore, you should not rely on any of these forward-looking statements as predictors of future events. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, our ability to improve our financial and operational performance and execute fully our global business strategy, the effect of economic factors, our ability to improve working capital, our ability to reverse declines in active representatives, general economic and business conditions in our markets, our ability to attract and retain key personnel, competitive uncertainties in our markets, any changes to our credit ratings and the impact of such changes on our financing costs, rates, terms, debt service obligations, access to lending sources and working capital needs, the risk of an adverse outcome in any material pending and future litigation and those disclosed as risks in other reports filed by us with the Securities and Exchange Commission (“SEC”), including those described in Item 1A of our most recently filed Annual Report on Form 10-K and subsequent reports on Forms 10-Q and 8-K and those discussed in the definitive proxy statement filed by the Company on October 4, 2019 and any amendments thereto. Other risks and uncertainties include the timing and likelihood of completion of the proposed combination of the Company and Natura &Co, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals for the proposed transactions that could reduce anticipated benefits or cause the parties to abandon the transactions; the possibility that the Company’s shareholders may not approve the proposed transactions; the possibility that Natura &Co’s shareholders may not approve the proposed transactions; the possibility that the expected synergies and value creation from the proposed transactions will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Natura &Co will not be integrated successfully; disruption from the proposed transactions making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; the possibility that the proposed transactions do not close, including due to the failure to satisfy the closing conditions; the possibility that the intended accounting and tax treatments of the proposed transactions are not achieved; the effect of the announcement, pendency or consummation of the proposed transactions on customers, employees, representatives, suppliers and partners and operating results; as well as more specific risks and uncertainties. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made.  Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.


Participants in the Solicitation

Natura &Co, the Company, their respective directors and certain of their respective executive officers and employees may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction.  Information about Natura &Co’s directors and executive officers are set forth in the definitive proxy statement filed by the Company on October 4, 2019 and any amendments thereto, and information about the Company directors and executive officers is set forth in its definitive proxy statement filed with the SEC on April 2, 2019, which also may be obtained free of charge from the investor relations page of the Company’s website www.Avonworldwide.com.  To the extent holdings of Company securities have changed since the amounts contained in the proxy statement for the Company’s 2019 Annual Meeting of Shareholders, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.  Additional information regarding the interests of participants in the solicitation of proxies in connection with the proposed transaction is included in the definitive proxy statement filed by the Company on October 4, 2019 and any amendments thereto and may be included in other relevant materials Natura &Co and the Company file with the SEC.

Additional Information and Where to Find It

The proposed transaction involving Natura &Co and the Company will be submitted to the Company’s shareholders and Natura &Co’s shareholders for their consideration.  In connection with the proposed transaction, HoldCo has filed with the SEC on September 24, 2019 a registration statement on Form F-4 (Reg. No. 333-233910) that includes a proxy statement for the Company’s shareholders.  The registration statement was declared effective by the SEC on September 27, 2019.  The definitive proxy statement was filed on October 4, 2019 and the Company mailed the definitive proxy statement to its shareholders on or about October 8, 2019.  The Company and Natura &Co may file other documents regarding the proposed transaction with the SEC.  This communication is not intended to be, and is not, a substitute for such filings or for any other document that Natura &Co or the Company may file with the SEC in connection with the proposed transaction.  SECURITY HOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE REGISTRATION STATEMENT ON FORM F-4 AND THE DEFINITIVE PROXY STATEMENT AND ANY AMENDMENTS THERETO AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION.  The registration statement, the definitive proxy statement and any amendments thereto and other relevant materials and any other documents filed or furnished by Natura &Co or the Company with the SEC may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, security holders will be able to obtain free copies of the registration statement, the definitive proxy statement and any amendments thereto from Natura &Co by going to www.NaturaeCo.com and from the Company by going to its investor relations page on its corporate web site at www.Avonworldwide.com.

No Offer or Solicitation

This communication is neither an offer to buy, nor a solicitation of an offer to sell, subscribe for or buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.  No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.

Item 9.01 Financial Statements and Exhibits.
 
 
(d) Exhibits.
 
Exhibit
Number
 
 
Description of Exhibit
 
 
 
2.1
 
Amendment Number Two, dated as of November 5, 2019, to the Agreement and Plan of Mergers, dated as of May 22, 2019, among Avon Products, Inc., Natura Cosméticos S.A., Nectarine Merger Sub I, Inc., Nectarine Merger Sub II, Inc. and Natura &Co Holding S.A.


SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  AVON PRODUCTS, INC.  
       

By:
/s/ Ginny Edwards  
    Name: 
Ginny Edwards
 
   
Title:  
Vice President, Interim General Counsel
and Corporate Secretary
 
Date: November 5, 2019      
 






Exhibit Index


Exhibit
Number
 
 
Description of Exhibit
 
 
 
2.1

 




Exhibit 2.1

AMENDMENT NUMBER TWO TO AGREEMENT AND PLAN OF MERGERS

This Amendment Number Two (this “Amendment”) to the Agreement and Plan of Mergers, dated as of May 22, 2019 (the “Merger Agreement”), by and among Natura Cosméticos S.A., a Brazilian corporation (sociedade anônima) (“Parent”), Avon Products, Inc., a New York corporation (the “Company”), Nectarine Merger Sub I, Inc., a Delaware corporation and wholly owned direct subsidiary of HoldCo (“Merger Sub I”), Nectarine Merger Sub II, Inc., a Delaware corporation and wholly owned direct subsidiary of Merger Sub I (“Merger Sub II”), and Natura &Co Holding S.A., a Brazilian corporation (sociedade anônima) (“HoldCo”), is made as of November 5, 2019.  Capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Merger Agreement.

RECITALS

WHEREAS, Parent, the Company, Merger Sub I, Merger Sub II and HoldCo entered into the Merger Agreement on May 22, 2019;

WHEREAS, on October 3, 2019, Parent, the Company, Merger Sub I, Merger Sub II and HoldCo entered into that certain Amendment Number One to the Merger Agreement (the “First Amendment”);

WHEREAS, Section 11.03 of the Merger Agreement permits the parties to amend the Merger Agreement by an instrument in writing signed by the parties hereto; and

WHEREAS, the parties hereto desire to further amend the Merger Agreement as set forth herein.

NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereof, and intending to be legally bound hereby, pursuant to Section 11.03 of the Merger Agreement, the parties hereto agree as follows:

AGREEMENT

SECTION 1.1          Amendments to Section 8.09(c).  Section 8.09(c) of the Merger Agreement is hereby amended and restated in its entirety as follows:
 
“(c) Upon the making of the Parent Contribution by the Founding Controlling Parent Shareholders, HoldCo shall create a special equity reserve in an amount equal to the difference between the net equity book value of the Parent Shares contributed in the Parent Contribution and the value attributed by the Founding Controlling Parent Shareholders to such Parent Shares. HoldCo shall account for such special equity reserve in an amount net of any income tax liability of HoldCo that may be recognized upon the Parent Contribution, so that no expense is accounted at HoldCo as a result of such tax liability; provided that if HoldCo does not receive a formal endorsement of such accounting treatment from the CVM before the date of issuance of HoldCo’s financial statements for the fiscal year ended December 31, 2019, then HoldCo shall account for such income tax liability within the profit and loss accounts of HoldCo. HoldCo shall take any and all necessary action, including making all necessary shareholder proposals and using reasonable best efforts to obtain all necessary shareholder approvals, on or before the ordinary general meeting of shareholders that will approve the financial statements as of and for the fiscal year ended December 31, 2019, to ensure that the balance of any and all accumulated losses is absorbed against the capital reserve formed upon the Parent Contribution. The Founding Controlling Parent Shareholders shall agree to vote their shares in favor of such shareholder proposals.”


SECTION 1.2          Amendments to Section 11.02.  The first sentence of Section 11.02 of the Merger Agreement is hereby amended by (i) replacing the text “and” after the text “Article 2” with a comma and (ii) adding the text “, the agreements set forth in Section 8.09(c) and, solely to the extent related to Section 8.09(c), the agreements set forth in Section 7.12” after the text “Section 7.05”.
 
SECTION 1.3          Amendments to Section 11.06(a).  Section 11.06(a) of the Merger Agreement is hereby amended by adding the following text as the final sentence of such section: “Notwithstanding the foregoing, following the First Effective Time, the provisions of Section 8.09(c) shall be enforceable by holders of Company Common Stock at, or immediately prior to, the First Effective Time.”
 
SECTION 1.4          Additional Representations and Warranties.  Each of the parties represents and warrants that (a) this Amendment has been duly executed and delivered by such party and (b) this Amendment constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity).
 
SECTION 1.5          Full Force and Effect.  Except to the extent specifically amended hereby and by the First Amendment, the Merger Agreement remains unchanged and in full force and effect.  From and after the execution of this Amendment, each reference in the Merger Agreement to “this Agreement,” “hereof”, “hereunder” or words of similar import, will be deemed to mean the Merger Agreement, as amended by this Amendment and the First Amendment.
 
SECTION 1.6          General Provisions.  The provisions of Article 11 (Miscellaneous) of the Merger Agreement shall, to the extent not already set forth in this Amendment, apply mutatis mutandis to this Amendment, and to the Merger Agreement as modified by this Amendment and the First Amendment, taken together as a single agreement, reflecting the terms as modified hereby.
 
[Remainder of this page is intentionally left blank; signature page follows.]



IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized.

 
AVON PRODUCTS, INC.
 
     
     
 
By:
/s/ Ginny Edwards
 
   
Name:
Ginny Edwards
 
   
Title:
Vice President, Interim General Counsel and Corporate Secretary
 
       
       








[SIGNATURE PAGE TO MERGER AGREEMENT AMENDMENT NO. TWO]

 
NATURA COSMÉTICOS S.A.
 
     
     
 
By:
/s/ Jose Antonio de Almeida Filippo
 
   
Name:
Jose Antonio de Almeida Filippo
 
   
Title:
Chief Financial and Investor Relations Officer
 
       
       
 
By:
/s/ Itamar Gaino Filho
 
   
Name:
Itamar Gaino Filho
 
   
Title:
Chief Legal Officer
 


 
NATURA &CO HOLDING S.A.
 
     
     
 
By:
/s/ Jose Antonio de Almeida Filippo
 
   
Name:
Jose Antonio de Almeida Filippo
 
   
Title:
Executive Officer
 
       
       
 
By:
/s/ Itamar Gaino Filho
 
   
Name:
Itamar Gaino Filho
 
   
Title:
Executive Officer
 









[SIGNATURE PAGE TO MERGER AGREEMENT AMENDMENT NO. TWO]

 
NECTARINE MERGER SUB I, INC.
 
     
     
 
By:
/s/ Robert Claus Chatwin
 
   
Name:
Robert Claus Chatwin
 
   
Title:
President
 


 
NECTARINE MERGER SUB II, INC.
 
     
     
 
By:
/s/ Robert Claus Chatwin
 
   
Name:
Robert Claus Chatwin
 
   
Title:
President
 





[SIGNATURE PAGE TO MERGER AGREEMENT AMENDMENT NO. TWO]