New York Avon Products Inc., a direct seller of beauty products, agreed to buy Silpada Designs for at least $650 million in an effort to expand its jewelry business, the company said Monday.
Silpada, based in Lenexa, Kan., is a direct seller of sterling silver jewelry in the U.S., Canada and the U.K. Avon said Silpada will continue to operate as a standalone business with its existing 32,000 independent sales representative.
Silpada co-founders Bonnie Kelly and Teresa Walsh, CEO and co-founder Jerry Kelly and the entire Silpada management team will stay with the company.
Avon could make an additional payment in 2015 if some earnings growth targets are met. It expects the deal will help net income by 3 cents to 5 cents per share in 2011.
Avon, based in New York, says the acquisition will help it reach new customers and sales representatives. Silpada sells its products primarily through in-home parties similar to Tupperware parties. Avon’s salespeople traditionally market to customers one-on-one.
Silpada also makes more expensive jewelry than Avon currently sells. Silpada’s prices range from $12 to $279, with an average of $64, according to its Web site.
For Avon, jewelry is part of its fashion segment, which made up $1.77 billion of its $10.38 billion in 2009 revenue. Its traditional strength, cosmetics, still makes up more than 70 percent of its business.
Silpada has $230 million in annual revenue.
The deal is expected to close in the third quarter.
Avon shares rose 15 cents to close at $28.42 Monday.