July 14, 2010, 4:12 PM

Avon buys jewelry retailer Silpada Designs for $650 million

But the beauty products giant, a major online retailer, will not bring Silpada online.

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Avon Products Inc. will purchase all of the assets of Silpada Designs Inc., a direct seller of sterling silver jewelry with operations in the United States, Canada and the United Kingdom, for $650 million. The transaction is expected to close in the third quarter.

Avon has stated in past that its strategy is to explore acquisition opportunities that complement its core beauty and direct-selling business. In line with this strategy, Avon expects Silpada to generate incremental growth by reaching new consumers and sales representatives with a higher-priced jewelry brand, the company says.

“Over the past decade, we have watched Silpada build an enviable reputation as a fast-growing, high-quality jewelry brand and one of the most impressive party-plan direct selling organizations in the world,” says Andrea Jung, Avon’s chairman and CEO. “This new partnership is an exciting opportunity to reach new consumers and representatives with a higher-tier brand and direct sales model that complements our existing business.”

But it will not be reaching new consumers via the web. While Avon’s web fortunes are enormous—it is No. 30 in the Internet Retailer Top 500 Guide, racking up $739 million in online sales in 2009, according to Internet Retailer estimates—Silpada does not sell on the Internet. And that will not change with the acquisition.

“Avon’s direct selling model is very different from Silpada’s,” an Avon spokeswoman says. “Silpada has had a highly successful selling model. Right now it’s what works and there is no plan to change that strategy.”

Silpada will continue to operate as a standalone business, and its existing 32,000 independent sales representatives will be the exclusive sellers of Silpada products through its party-plan direct selling model, where a sales representative invites usually 10 to 12 customers to her home.

Silpada co-founders Bonnie Kelly and Teresa Walsh, CEO and co-founder Jerry Kelly, and the entire Silpada management team will continue to lead the company from their headquarters in Lenexa, KS. CEO Jerry Kelly will report to Chuck Cramb, Avon’s vice chairman and chief finance and strategy officer.

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