NEW YORK (AP) -- Beauty products company Avon is selling the jewelry business Silpada back to its co-founders and their families for $85 million, well below what it paid three years ago.
Avon announced earlier this year that it was reviewing strategic options for the business which sells sterling silver jewelry at home parties. Avon purchased Silpada Designs in July 2010 for $650 million.
Avon has been struggling at home and abroad as weak sales have hurt its profitability. The company has also wrestled with a bribery probe in China that began in 2008 and has since spread to other countries.
CEO Sheri McCoy is leading the company in a turnaround plan to cut costs, leave unprofitable markets and streamlining its operations with the goal of achieving revenue growth in the mid-single-digit percentage and $400 million in cost savings by 2016.
The families of Silpada co-founders Jerry and Bonnie Kelly and Tom and Teresa Walsh, through their company Rhinestone Holdings Inc., were the highest bidders in an auction process for the business.
Avon said in a regulatory filing on Tuesday that the transaction also includes up to $15 million more if Silpada hits certain earnings targets over the next two years.
Avon Products Inc. anticipates taking a charge before taxes of about $80 million in the second-quarter tied to the sale. It expects to use the sale's proceeds for general corporate purposes, including repaying outstanding debt.
Silpada said late Tuesday that Kelsey Perry and Ryane Delka, daughters of the Walsh and Kelly families respectively, will serve as co-presidents. Perry most recently served as Silpada's brand merchandising manager, while Delka was previously the company's vice president of sales, development and training.
Jerry Kelly will remain as CEO, and he and Tom Walsh will serve as co-chairmen. Bonnie Kelly, Teresa Walsh, Delka and Perry will also serve as board members.
Silpada has more than 300 workers in the U.S. and Canada. The company international corporate headquarters and distribution center will stay in Lenexa, Kan. There are currently no plans to move its Canadian headquarters in Mississauga, Ontario.
The deal is expected to close on Wednesday. Avon Products shares closed at $21.29 on Tuesday. They have slipped 13 percent since hitting a 52-week high of $24.53 on May 22. They traded as low as $13.70 last November.