Avon Products Inc. agreed to sell the jewelry unit, Silpada Designs to Rhinestone Holdings Inc for US $85 million. The price for the sale was only one-seventh of the amount that Avon paid to buy the campaign that was launched in 2010.
As the leading door to door cosmetics retailer, Avon, bought Silpada Designs for about US $650 million last July 2010. Silpada was used to broaden Avon's product line and was used to tap into a new market. Sales at the time of Silpada's purchase were at US $230 million.
The agreement set by Avon includes an earn-out payment of as much as US $15 million. As per the agreement if Silpada meets a certain profit target within a two year period, Avon will recieve the earn-out payments. Avon is expecting a $80 million payout, pretax, with a noncash charge for the estimated loss from the sale of Silpada.
Rhinestone Holdings Inc is a newly formed company which was created by Silpada's founders.
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