By Brazil Stock Guide – Natura &Co Holding SA (NATU3) sold its Avon operations in Central America and the Dominican Republic (CARD) to Grupo PDC, in a symbolic but strategic move that analysts say could pave the way for further disposals. The transaction, announced in a report by XP Investimentos, marks the first concrete step in the Brazilian cosmetics company’s plan to unwind Avon International.
XP said the deal demonstrates Natura’s commitment to divesting underperforming assets. Still, the brokerage warned that investors remain cautious given the steep cash burn and restructuring challenges in the Avon International portfolio. Despite those risks, XP maintained its buy recommendation for Natura (NATU3), highlighting the potential earnings growth from the company’s so-called Wave 2 transformation in its core cosmetics business.
Deal structure
Under the binding agreement, Natura will continue supplying finished products to Avon CARD while collecting royalties for the brand license in the region. Grupo PDC agreed to cover $22 million in receivables owed by Avon CARD to Avon Mexico. The unit itself was valued at just $1. The deal is set to close by October 30, subject to corporate restructuring, though it may be completed earlier.
Avon CARD includes operations in Guatemala, Nicaragua, Panama, Honduras, El Salvador and the Dominican Republic. The business posted an adjusted EBITDA loss of 16 million reais in the first quarter of 2025, underscoring the financial pressure Natura is seeking to ease.
Next in line
Natura has outlined three divestments: Avon CARD, Avon Russia and ACL. Since CARD and Russia are both controlled by ACL, market participants expect Avon Russia to be the next on the block. The key question, XP noted, is at what price future disposals will occur. If they follow the symbolic valuation of CARD, potential buyers may still require capital injections to absorb losses, casting doubt on the economic viability of the broader divestment plan.
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