Avon announced job cuts of 2,500 Monday as well as plans to move its corporate headquarters from New York City to the U.K.
An Avon representative told The Wall Street Journal
that the move to the United Kingdom was being made to consolidate the bulk of the company's operations and not for tax purposes. The newspaper added that Avon is expected to maintain its New York incorporation, though.
Two weeks ago, Avon sold its North American operations to the private-equity firm Cerberus Capital Management LP, according to The Journal. Bloomberg Business reported that Cerberus invested
$435 million in Avon and $170 million into its new North American company.
Avon's shares jumped 3.9 percent in late trading after Monday's announcement. The company's stock is now up 8.1 percent in 2016 as of the end of trading Monday, Bloomberg noted.
"With the recent completion of the sale, our commercial operations are now fully outside of the United States, allowing us to dramatically rethink our operating model," Sheri McCoy, Avon chief executive, said in a statement.
The move also appeared to win the approval of Barington Capital Group and other Avon activist investors, Bloomberg reported. Barington, which owns 3 percent of Avon, had taken its complaints about Avon public in December.
"We are convinced that there is a significant opportunity at hand for Avon to unlock its intrinsic value for the benefit of all its shareholders," Barington said at the time
. "In order to realize Avon's value potential and restore its market leadership and financial performance, we believe the Company must promptly implement a restructuring plan."
Barington chief executive James A. Mitarotonda said in a statement that, while more can be done, Monday's move is a step in the right direction.
"We are pleased that Avon is following our recommendation to reduce excess costs and corporate overhead," Mitarotonda said in a statement, per Bloomberg. "We also continue to believe that Avon needs to add new independent directors that can help improve long-term value and ensure that shareholder interests are protected."
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