This article was published on March 26, 2025, at 3:58 p.m. on the ChosunBiz MoneyMove site.
LG H&H is reportedly weighing the possibility of selling its U.S. subsidiary, The Avon Company. In the past, LG H&H implemented an active mergers and acquisitions (M&A) strategy under Vice Chairman Cha Suk-yong, gaining a reputation for numerous success stories. However, it is also known to have faced significant aftereffects from frequent M&A activities. Since the leadership change, LG H&H has been focusing on strengthening its fundamentals.
On the 26th, investment banking (IB) industry sources stated that LG H&H is in the process of selling Avon, seeking to secure over 150 billion won in principal. The company, which acquired infrastructure in North America, is believed to have begun the sale due to deteriorating performance.
In April 2019, LG H&H acquired 100% equity in Avon (formerly New Avon) from Cerberus, a global private equity firm, for 145 billion won. The following year, it made a 100% in-kind contribution of Avon shares to its subsidiary, LG H&H USA. As a result, Avon became a grandchild company of LG H&H.
Avon, which was intended to serve as a foothold for entry into North America, did not significantly contribute to performance, as the direct sales approach was not aligned with current trends. The year after the acquisition, it recorded a net profit of 2 billion won in 2020, but subsequently posted losses of 5.5 billion won in 2021, 47 billion won in 2022, 40.4 billion won in 2023, and 28 billion won in 2024.
A researcher from a securities firm noted, “From a management perspective, it is a division that is worth considering for sale,” adding, “Since Avon does not significantly contribute to overall performance, it could be a rational decision to streamline operations.”
Cha, who was the longest-serving chief executive officer (CEO) leading LG H&H at the time of the Avon acquisition, was referred to as a “master of M&A.” However, he stepped down after 18 years due to poor performance in 2022. During his tenure, he expanded the company by acquiring Coca-Cola beverages, The Face Shop, Haitai Confectionery & Foods, and Herbalife.
The position held by Cha was taken over by Lee Jeong-ae, the first female president in LG Group history. Under her leadership, LG H&H’s M&A policy changed. She dismantled the existing M&A and investor relations sectors and established a new strategic sector. The only major M&A activity in 2023 was the acquisition of VivaWave for 42.5 billion won.
Avon, with a 130-year history as a direct sales cosmetics company, sold its North American business, including its headquarters in the U.S., to private equity firm Cerberus in 2016. The North American division acquired by LG H&H was renamed Avon after the name change from New Avon.
An industry source in the IB sector reported, “In the case of LG Group, it is common not to choose a separate advisory firm when selling subsidiaries,” explaining that “when advisory firms suggest corporations with acquisition intentions, LG contacts them directly.”
A representative from LG H&H stated regarding the potential sale of Avon that the claim is “groundless.”