Avon Products (NYSE:AVP) has appointed Sherilyn McCoy, former vice president of Johnson & Johnson (J & J), as Chief Executive Officer and ended the four month search for a new leader to revive the operations of the largest direct sales company in the world, according to Reuters. Avon shares fell by 3.5% following information. The decision was announced a week after Avon rejected a takeover bid worth $10 billion from the American cosmetics company Coty.
“It is a clear sign that Avon board is against the purchase offer from Coty”, said Ali Dibadj, an analyst at Bernstein company. President of Coty, Bart Becht said a week ago, after the company made public its offer for Avon, that the acquisition attempt would be more complicated if Avon will appoint a new CEO. Coty representatives could not be reached for comment on the appointment of new CEO.
McCoy will be charged with the task of Avon recovery, affected by lower sales in the U.S., the domestic market of the company, but also in emerging markets like Brazil and Russia. The company also faces a federal investigation related to possible violations of U.S. law that prohibits bribery abroad. In December last year, Avon announced that it will seek out a replacement for the current company President and CEO Andrea Jung, who will become executive chairman.
It is possible that McCoy’s lack of reputation with investors, further involvement of Jung in the management of Avon and the timing of announcement immediately after the takeover bid by Coty, to disappoint financial markets. Coty announced already that it will not make an offer for a hostile tekeover. In the first part of the stock market transactions in New York, Avon shares were down 3.5%. McCoy, who will take over her responsibilities with Avon on April 23, worked at Johnson & Johnson for three decades, and in February 2010 became vice president of the group, contributing to the reorganization of the pharmaceutical division affected by the expiry of some patents.
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