Advertisement

Avon asks court to void Chartwell's ownership position

By NENA BAKER UPI Business Writer

NEW YORK -- Avon Products Inc. has asked a federal court to void the purchases of Avon shares made by Chartwell Associates, an unfriendly investor group that has acquired a 16 percent stake in the door-to-door cosmetics company.

Chartwell, whose members include representatives of Avon rival Mary Kay Cosmetics Inc. of Dallas, the Fisher real estate family of New York and oil heir Gordon Getty, has purchased more than 9 million shares of Avon common stock for about $312 million over the last six months.

Advertisement

In a suit filed with the U.S. District Court in Manhattan late Monday, Avon alleges that Chartwell made 'false, incomplete and misleading' public disclosures in filings with the Securities and Exchange Commission regarding the group's purchase of Avon shares.

The 'true, undisclosed purpose for their investment in Avon is to acquire an unfair competitive advantage for the benefit of Mary Kay ... at the expense of Avon, its employees and its public shareholders,' the suit said.

A Chartwell spokeswoman said the group had no immediate comment on the suit.

Avon's suit also seeks to enjoin Chartwell from acquiring additional shares in Avon and to require the group to dispose of the blocks of Avon stock it already has acquired.

Advertisement

Chartwell also has purchased about 50,000 shares of Avon preferred stock, or less than 1 percent, for about $1.3 million.

In the suit, Avon said that Chartwell, contrary to statements made in SEC filings, 'left the door wide open to arrange some sort of merger or combination between Avon and Mary Kay.'

The suit is the latest salvo in the continuing struggle between Avon, the world's largest cosmetics maker, and its much smaller rival, which also uses independent sales representatives to distribute beauty products.

Late last month, Avon agreed to nominate two directors proposed by Chartwell and said it would hire John P. Rochon, Mary Kay's vice chairman, as a consultant to Avon. The agreement allowed Avon to skirt a potentially bruising proxy fight with Chartwell.

The suit said Rochon, as part of the pact, was to sever his ties with Mary Kay. Instead, the suit said, Rochon, is negotiating to receive 'substantial monthly payments' from Mary Kay through an intermediary.

Earlier this month, Avon amended its shareholder rights plan to make a hostile takeover more difficult. Sources said Chartwell was preparing a lawsuit challenging Avon's so-called poison-pill plan.

In morning trading on the New York Stock Exchange, Avon shares were unchanged at $35.625 a share.

Advertisement

Latest Headlines

Advertisement
Advertisement

Follow Us

Advertisement