LG H&H buys Avon factory in China

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LG H&H buys Avon factory in China

LG Household & Health Care announced Wednesday it is buying Avon’s Chinese factory in an effort to expand production facilities.

According to LG Household, subsidiary The Face Shop will purchase the London-based cosmetics firm’s factory in Guangzhou, China, for around 79.3 billion won ($70.8 million).

Avon’s 49,500-square-meter (12.25-acre) factory in Guangzhou, China is capable of producing 13,000 tons of cosmetics and hair care and body products every year. Its facilities meet cGMP (current Good Manufacturing Practice) regulations, which are enforced by the U.S. Food and Drug Administration.

LG Household will use the Guangzhou factory to manufacture LG products like The Face Shop branded goods for its Chinese and other Asian businesses while continuing to produce Avon products as well. Avon employees will remain at the factory.

The buyout deal is expected to be finalized in February after Chinese authorities approve the transaction.

The move comes less than a year after LG Household purchased Avon’s Japanese operation for around $96 million last April. Avon said it hopes the Guangzhou factory sale will help increase its operational flexibility.

“This transaction is a significant step forward in our effort to ‘Open Up Avon’ by operating more efficiently, with a leaner, more agile global infrastructure,” said Jan Zijderveld, CEO of Avon. “We know [LG Household] well and believe that they will continue to be a strong partner for Avon.”

“We are pleased to … add a state-of-the-art facility with powerful capabilities to deliver quality products for the fast-growing local market,” added Suk Cha, CEO of LG Household.

BY KIM EUN-JIN [kim.eunjin1@joongang.co.kr]
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