• 2009-06-09

    Avon Products Inc. has put Tiffany & Co - [shopping]


    Avon Products Inc. has put Tiffany & co., the Fifth Avenue jeweler, on the auction block. The move had long been expected in the business world. "There is no logical fit in the world" between tiffanys precious gem business and Avon's cosmetics busines, said Daniel J. Meade, an analyst with First Boston Corp. Avon picked up tiffany jewellery five years ago for about $100 million in stock. Tiffany, established in New York City 144 years ago, is headquartered at its landmark building in midtown Manhattan. It operates stores in Chicago, Atlanta, Houston, Dallas, Beverly Hills, Calif., San Francisco and Kansas City, Mo. Besides fine jewelry, Tiffany sells silver, china, crystal and timepieces. Its distribution and production facilities are in Newark and Parsippany, N.J. The sale, Meade said, has "been talked about as something they should do for a long time. It's a good move. They have an awful lot of assets that are generating very little money." In the five years Avon has owned Tiffany, the Tiffany image has been tarnished by overexposure, from its broadened distribution system to its sale of air rights over its headquarters building, some analysts say. "Earnings today are probably below the level of five years ago," said Jeffrey Ashenberg, an analyst with L.F. Rothschild, Unterberg, Towbin. More than 25 companies and individuals have indicated an interest in buying Tiffany, according to Hicks B. Waldron, Avon's chairman and chief executive officer. He added there is also a chance that Tiffany management may buy the company. Avon had considered making Tiffany the flagship of a specialty retailing division. But, Waldron said, Avon has decided to concentrate on expanding its beauty, health care and direct mail businesses. "If a different owner can do more with Tiffany _ and is willing to pay a fair price _ then divestiture would be in the best interests of Tiffany & Co and of Avon shareholders," Waldron said. William R. Chaney, chairman of the board of Tiffany, said he supported Avon's decision. About 4 percent of Avon's sales and 1 percent of its net earnings came from Tiffany in 1983. Avon said it earned $164 million on sales of $3 billion last year. Tiffany earned $2.1 million on sales of $125 million in 1983, said Avon spokesman John Cox. He added the company would "let the market determine the value but we do expect to make a substantial profit on this." When Tiffany was acquired by Avon, it was a publicly held company with common stock trading over the counter. Besides its cosmetics business, Avon Products also owns Mallinckrodt, a health care products and chemicals concern; Foster Medical, a health care services operation; and a direct mail and specialty retailing division, which includes Avon Fashions and Tiffany.