M&A Announcement

May 23, 2019

Good morning, ladies and gentlemen. Thank you for waiting. We would like to welcome everyone to Natura and Co Conference Call. This event is being recorded and all participants will be in listen only mode during the company's presentation. After Natura's remarks are completed, there will be a question and answer session. At that time, further instructions will be given. We have simultaneous translation into Portuguese and questions may be asked normally by participants connected from abroad either in English or Portuguese. I'd like to pass the floor over to Mr. Roberto Marques, Executive Chairman of the Board of Natura and Co. Good morning to all of you, and thank you for joining us on this call. I'm very excited. And to be honest, I think we're all a little bit emotional today to be presenting to all of you the transaction that we announced last night, welcoming Avon into Natura and Co Group and creating a leading global direct to consumer beauty group. We are indeed bringing together 2 industry leaders with strong commitment to making positive social impact and empowering women. I'm joined on this call by Juan Paulo Ferreira, Natura's CEO. I'm also very pleased to welcome Jan Weijerfeld, CEO of Avon Products, who will share with us his perspective on the combination. We'll run you through the main highlights of this transaction, and we'll then be happy to take your questions. So let me begin on Slide 3 with the headline messages of this transaction. By joining with Avon, Natura and Co will become the world's 4th largest pure play beauty company with combined gross sales of about $10,000,000,000 This combination marks another transformation step toward building a global multi brand, multi channel group, reaching over 200,000,000 consumer daily through iconic brands serving various consumer profiles and distribution channels. We are uniting 2 purpose driven forces. I believe that business can be a force for good and are committed to generating social and economic value, promoting sustainability and empowerment of women. By leveraging Natura expertise, combination would also allow Avon to speed up the implementation of its Open Up Avon strategy to achieve its vision of a digital social selling beauty company. The transaction is driven by a powerful industrial logic that will help accelerate and drive growth by reinvesting in key areas like digital, product innovation and brand initiatives, enabled by a target annual synergies of between $150,000,000 to $250,000,000 annually. We will develop all those points throughout the presentation. But before that, let's look at the key transaction highlights on Slide 4. The transaction we're announcing today is an all share transaction, over which Aegon share will be exchanged for 0.300 Natura shares. That implies a premium of 28% to Avon's undisturbed trading price, giving Avon an enterprise value of $3,700,000,000 The proposed parity will give Avon's current shareholders ownership of 24 percent of the combined company, while Natura and Co shareholders will hold the remaining 76%. The goal is to lift the group on Sao Paulo B3 market with a public growth of 55% and with ADRs listed on the New York Stock Exchange. Finally, the transaction is subject to customary closing conditions, including approval by shareholders of both companies and regulatory approvals. We do expect closing to occur in early 2020. Let's move to Slide 5. The transaction has a powerful and compelling strategic rationale, accelerating constitution of a global multi brand, multi channel group. First of all, it's another step in consolidating a purpose driven group. Avon's strong heritage of social causes and commitment to the empower of women resonates with Natura and Co vision of making a positive social and environmental impact as part of our triple bottom line approach. 2nd, we are taking another major step in building a portfolio of global brands, in line with our strategy. Avon is an iconic pillar alongside Natura, Aesop and The Body Shop. 3rd, the combination will focus on driving growth and invest in 3 strategic areas: digital e commerce, research and development and brand initiatives. Those investments will be enabled by important synergies between $150,000,000,000 to 200 $1,000,000,000 estimated on annual basis, which by the way we targeted to achieve within 36 months. These synergies are principally across Brazil and Latin America. Also, the group that results from today's combination is a truly multichannel, direct to consumer leader, able to reach more than 200,000,000 consumers daily through its network of 6,300,000 national consultants and representatives, its over 3,200 stores and its growing digital platform. Finally, Cliniko by Entities creates a strong platform to accelerate the group's internationalization, to enhance its presence in core markets in Latin America and gain a strong presence across key categories with a strong complementarity product portfolio. Now I'm super pleased to hand over to Jan to present Livon's perspective. Jan, welcome, and I'll turn to you. Thanks a lot, Roberto. And now moving to Slide 6. This is a historic next step for Avon, one that the Board and I believe will provide a new long term and strategic home for this iconic business. To tell you a bit more about Avon, our vision is grounded in a strong purpose with a heavy emphasis on empowering women. Our purpose driven foundation is something we share in common with Natura and something we are particularly excited about. To name a few, Stand For Here is one of our global programs to help create opportunities for women to help them build their own business success in their own way and in their own terms. And the Aegon Foundation For Women, which was founded in 1955, has contributed over $1,000,000,000 to date. Now turning to the components of our business. The majority of our revenue in 2018 came from our duty 2 degrees. And in terms of geography, we have a very global footprint. With nearly 40% of our revenues derived from Latin America, 40% comes from Europe, Middle East and Africa. Now turning to Slide 7. We have a strong global presence with sales operations in 56 countries and distribution in an additional 21, all supporting a team of millions of Avon representatives around the world. In addition to our leading positions in Latin America, we have leadership positions in key markets, including South Africa, Russia, Central Europe and the Philippines and across categories like color, skincare and fragrance. Last year, we started a plan to open up Avon and turnaround the company. Slide 8 outlines our open up strategy. And at the core is the belief that Avon must accelerate its pace of change and transform this business. In that time, we have worked to reboot direct selling, modernize the brand, unlock digital and e commerce capabilities and drive a new performance culture. Since announcing this plan, the whole Avon team has executed with a renewed sense of focus and urgency. Today, we are positioned as a stronger, more competitive company. Combining with Natura is an exciting new chapter for Avon and will enable us to accelerate our Open Up Avon strategy and help us further expand especially our online channels. In particular, we will be able to step change our e commerce and digital capabilities to create a world class digital beauty company. We will have access to a bigger portfolio of products and innovations, and we will further improve our social selling fundamentals by creating 1 of the world's premier social selling companies. Importantly, like Natura, Avon has a purpose driven culture and a strong commitment to doing the right things for our people and our communities. Avon empowers women around the world and helps them build success in their own way and on their own terms. Before I turn back over to Roberto, I would like to thank all the Aegon team members for their unwavering dedication and hard work and passion. Their incredible efforts have created positive momentum and built the foundation that is now being positioned to succeed in the future. With that, I will turn back to Roberto. Yes. And thank you very much. And again, on a personal note, I want to thank you for your partnership with Avon's Board that helped us to get to this point. And again, we look forward to start working and getting to know your team. And congratulations again on the turnaround plan. So let me now move to Slide 9. As I mentioned in the introduction, this is another transformation step in the true and core journey that will constitute a purpose driven multi brand, multichannel global group that brings under the same roof 4 leading business in a portfolio of iconic brands. We are going to detail that journey. We began actually through 1 store in Sao Paulo exactly 50 years ago when Natura was founded. In 1990, so the first step in the internalization will move into other Latin America countries. In 2013, it evolves into a multi brand group with Aesop. And then in 2017, took another major step forward in terms of international presence and multichannel development with The Body Shop. And now with Avon, we mark another gigantic step change to promote social, economic and environmental progress on an even bigger scale. I would like to stress again here the philosophy that underpins this construction. We strongly believe in 2 complementary concepts, autonomy and interdependency. We aim to empower each business and brand and preserve its identity, while getting the most out of the group to transfer of knowledge and best practices. As I said, Natura and Co is a purpose driven group committed to the triple mono line. Our purpose is to nurture beauty and relationships for a better way of living and doing business. And each business and brand has a mission in line with its overarching purpose. With Avon, we'll be adding a platform that is equally committed to make this positive impact as Jan presented a couple of minutes ago. Now let me hand over to Juan Paulo Ferreira to comment on the new scale of the group. Back to you, JP. Thank you, Roberto, and hello, everyone. You may be aware Natura is celebrating its 50th anniversary this year. And what better gift could we reach for? I have already mentioned on other occasions that this is only year 1 of the next 50 years, and today's transaction is indeed a new milestone for us. Turning now to the transaction on Slide 10. The addition of Avon allows Matura and Co to significantly advance in the global beauty rankings. The combined company is expected to have gross revenues of above US10 $1,000,000,000 Upon closing, we'll have more than 6 1,000,000 consultants and representatives and a presence in 100 countries, strengthening our sales force and our global footprint. The combined group will be a leader in direct to consumer with multiple touch points on a daily basis through its truly multichannel network, leveraging our beloved brands, our common passion for relationships and our multichannel capabilities, the now expanded group will bring beauty to over 200,000,000 consumers across the world anytime, anywhere, every day. On Slide 11, you see that with this transaction, Natura Incro is taking another giant step towards becoming even more global and international, with close to 70% of sales expected to happen outside of Brazil. Latin America in total, including Brazil, will represent about 56% of the business, while Asia Pacific, Europe, Middle East and Africa represent the balance. In Latin America only, the combined group will have more than 4,000,000 consultants and representatives. We'll have greater access to a broader and more diversified product portfolio and new services, which will allow them to improve their business and better serve their clients. By the way, it's interesting to notice, as you can see on the graph, there are almost 500,000 consultants who have already bought into this combination even before it was finalized, so to speak, by selling both Natura and Avon products. And we expect this number will increase over time as the combination also builds on the respective strengths of Natura and Co and Avan to enhance value for consumers, consultants and representatives across Latin America. Notice on Slide 12 the complementarity of our portfolios. Natura's leadership in fragrance and body care, Avon's leading position in personal care. So along these core beauty categories, the combination also takes Natura and Co into fashion and home, which is a category with good development potential. No doubt, there are significant growth opportunities ahead. Now let me hand back to Roberto. Thank you, JP. So let's move to Slide 13. Synagis are obviously one of the catalysts of this transaction. But they are not a goal in themselves. Rather, they are a need to free up resources that can be reinvested in core capabilities that will accelerate our growth. For us, United Natura and Avon is clearly a growth combination. On this Slide 13, we detail the 3 strategic areas in which we intend to allocate those resources to drive growth. The first one is digital and e commerce. As you know, digital is transforming already direct selling and creating a myriad of opportunities to connect with consumers, creating lasting relationships and develop social selling. The combination is a powerful direct to consumer platform, and we will continue to invest to boost the relevance of digital technology for consultants, representatives, upgrade services and improve the overall experience. A second key area is stepping up investment in research and development and innovation in such field as sustainable materials. And third is brand initiatives, where we can enhance differentiation through segmented marketing and combine our knowledge of consumer and consultants with digital capabilities to improve our CRM and make more personalized offers. Matura's early success in digitalization, its operation is a scalable platform. We strongly believe further upside can be generated by the combination of our 2 companies. Indeed, we believe this unlocks potential to implement innovation innovative initiatives and create other value by leveraging the group's scale in OHA. This slide provides several examples, such as optimizing the product portfolio and category profile and increasing sales by combining know how on digital solutions. Another example is leveraging the respective footprint of 4 different business to grow other brands. Along the lines of what we discussed very recently at our Investor Day, Win Natura helping The Body Shop in Latin America and Convirtually, The Body Shop guiding Natura into Asia. A third key aspect is the potential to optimize Evon's Brazilian operation by harnessing Natura know how and capability. 4th is fully capitalizing on the powerful multichannel platform that Natura and Co has become to better serve consultants and consumers, giving them access to now 2 iconic beauty brands. There's no doubt should result in including consultants and representative retention and locking further growth catalysts. Let's move to Slide 14. This reinvestment in strategic areas that I just mentioned will be enabled by important target synergies we expect to generate going forward. The combination is driven by a powerful industrial logic that will improve the offering, capabilities and service of the group more than 6,000,000 consultants and representatives. We have extensively mapped synergies and estimated them in a range of $150,000,000 to $200,000,000 on an annual basis. We expect those synergies to be fully captured within 36 months of the closing. The synergies will be largely achieved across the Brazil and Latin America footprint and are spread in 3 major buckets. The first, of course, is sourcing. As you know, procurement is already one of the main areas of the synergies within Mature and Co as we present our recent Investor Day. And we see strong potential to enhance that to optimize purchasing of raw materials, freight and warehousing, advertising, catalog and back office functions. The 2nd bucket is manufacturing distribution, by optimizing our distribution center footprint, reducing the complexity of our overall plant organization and consolidating such activities as cargo and as a result, improving also service level to our consultants and representatives. Administrative expenses is another opportunity to better integration of areas such IT, data centers and networks. We estimate that the cost to achieve this synergy is a onetime of about $125,000,000 which will be incurred between 2020 2023. The capture of this synergy will also contribute to enhance our medium term profitability. On Slide 15, you see the pre and post transaction shareholding structure. On the right hand side of the slide, you see that Insura Current shareholders would own 70% of the combined company and Avon shareholders remaining 24%. The share in the combined group of Natura's founding and controller shareholders will be 45.1% and the free float will be 54.9%. On Slide we look at some key governance aspects. A new holding group will be created as a parent company to Avon and the Natura Companies, preserving the autonomy of each business and brands while implementing the interdependent business model already in place within Natura and Co. This company will maintain its headquarters where they are presently located. We do envision 4 major business led by 4 operating CEOs, Natura and Avon Latin America, Avon and Natura International, The Body Shop and Isek, which will both continue as a standalone business unit. We also plan to create a position of sustainable growth Finally, the combined company's Board will reflect the relative ownership of the new shareholder base. After closing, the Board will be comprised of 30 members, of which 10 members will be from the current call and 3 will be appointed from Avon. The 3 founders of Natura will remain as Co Chairman of the Board and Executive Chairman will also serve as the Group CEO. Let me now conclude on Slide 17 with key takeaways. In terms of financial metrics, the transaction values Avon's equity at about BRL 1,900,000,000 and gives it an enterprise value of BRL 3,700,000,000. This implies a multiple of 9.5x, excluding the expected synergy, and BRL6 0.7 percent factoring in the full impact of the target synergies. This combination creates the 4th largest Q4 A building in the world with annual growth rates exceeding $10,000,000,000 It also create a leader in direct to consumer, with a base of more than 200,000,000 consumers, like no other company in the beauty industry. With the addition of Avon, Irenco is taking another transformation step to build a multi brand, multi channel group. Designing these 2 purpose driven forces, which also amplify our pioneering effort to generate social, environmental and economic value, promote diversity and combat the threat of climate change. The combination will also allow Avon to accelerate implementation of its Open Up Avon strategy. And the transaction is driven by a powerful industrial logic that will help accelerate growth by reinvesting the target annual synergies of between $150,000,000,000 to $250,000,000,000 in areas like digital, product innovation and brand initiatives. Luis, thank you very much for your attention, and we are now happy to take your questions. Jose Filippo, CFO of Natura and Co Ken, JP here also with me, we'll take your questions now. Thank you. Ladies and gentlemen, we'll now begin the question and answer session. Comes from Thiago Macruz, Itau. Good morning, guys. First, I'd like to congratulate you for this deal. We know it must have been a lot of work to you all. And I have a couple of questions. First, I understand the rationale of this transaction. There are substantial synergies in the future. My question here is, isn't it hard to move on with the digital transformation in Artura core business in LatAm at the same time that the team is conducting a massive integration of Avon? Because once you look towards the future at the same time as digesting this asset, That's my first question. And my second question is, I understood that the synergies are all 100% operational, but from my understanding, it does not include revenue related synergy. I would like to understand if you guys see potential for those type of synergies to be generated as well and coming from where? These are my 2 questions. Thank you, Hey, Thiago. Good morning and Roberto here. So I'll start with the second part of your question, then I'll turn to JP. In terms of synergies, you are correct. The synergies that we are providing right now are basically operational synergies. As I provided some perspective, we see a lot of upside potential in terms of growth. Those upsides are not included on those numbers as you already anticipated. So JP will talk a little bit about the way we are thinking, keeping the focus on the execution of Natura and at the same time how we are thinking about the combination especially in Latin America. Thiago, as it comes to digital transformation, you probably recall, the approach we have been following, and it's my understanding that Avon is doing the same path. It's one of building modular and scalable solutions, which gives us the flexibility and speed to spread the new platform throughout our integrated consultant base towards our client base. So I don't see that being disturbed by the effort to integrate businesses and to seek for synergies as those will be pursued by a different team. Perfect. Just a follow-up, is it reasonable to assume that you will be spearheading this initiative in Latin America, the Avon integration? Will you spend most of your time there? And what is my last question? Thank you. Thiago, as you can probably appreciate it, we are not making any appointments today. Today is the day that we are celebrating the combination. And over time, we'll make those determinations. Thank you for the question. Thank you, guys. The next question comes from Bob Ford, Dario Lynch. Alberto, at the Avon Investor Day last year, Jan said that 98% of Avon's volume was sold for promotion. Consultants turnover is high, sales to be profit centers, market shares are growing, etcetera. Can you tell us a little bit about how you established comfort with the Avon brand and your ability to resurrect it with a consumer that may think of it as her mother's or grandmother's brand or just a cheap product? And how do you think about the role of the brand in the Matura portfolio over the longer term? Hey, Bob, good morning. Thanks for the question. Listen, I mean, we are actually very excited about the work that Jan has been doing already with Open Up Avon. As you probably saw on his presentation, really the focus on we buy the brand Avon, which has a tremendous penetration, has a very actually high likability across the globe with very low panel rejection, which is really a diamond, everything young likely to like to present the brand. So we share the same optimism about the brand. What Yanez has been doing in Open Up Avon is the transformation. A lot of changes in the footprint of Avon, reducing costs, etcetera, which we believe will allow with this combination to be accelerated. And as you saw, our goal is actually to drive top line revenue by reinvesting in brand marketing, brand initiatives and research and development alongside digital e commerce. So we think that the combination will amplify what's already in place with the open up Avon strategy. And therefore, we're going to be able to capture those benefits even sooner. So we are pretty confident in our ability to really continue to make Avon a beloved brand and a very current and contemporary brand. This is actually, and I'm curious when it comes to the housewares and fashion business, how are you thinking about those product lines over the longer term? And then I guess when it comes to your brand, certainly the systems and the digital platform is going to be a major component of that. And I was wondering, if you look at that element of the turnaround piece, is this going to be the extension of the Benator ERP, any reputation that you took for Avon or it's something else? And could you talk a little bit about the expected time frame and the Tahoeff and VAS portion of the consolidation plan, please? Hi, Bob. JP speaking. Let me start with home and fashion. So we see this as an enormous opportunity. Natura had looked at that and even tried prototypes of home and fresh portfolio a couple of years ago. We see that mainly adjacent to our beauty value proposition. And of course, it drives additional value for our network of consultants and representatives. So we do see that there's potential there. We don't know much about it, but we learned from Evon's team that of that potential reconfirmed by them and also the efforts to make it more effective, efficient that Jan has already presented in previous occasions. So we like that idea and we'll pursue it to our best capabilities. So Bob, you had a second part of your follow-up question and we couldn't hear well. So could you repeat? Yes. I was just asking about how you're thinking with respect to the systems and the digital platform in Avon. I would expect that that's a key piece of turning around the brand, addressing efficiencies, addressing the deepening, making better visibility. And as you think about that, do you pursue the platform and then do you budget $230,000,000 of a monthly period of time that Avon was pursuing last year? Or would you pivot a little bit and expand the PENATURA ERP and maybe move a little bit more rapidly and just replicate for Avon? Or do you pursue that independent path? And then I was asking about the time frame for that and the cost of that piece of the consolidation plan. Okay. So, okay, clearly, both companies are very much aligned in terms of evolving direct selling into a social platform, social selling. And it's actually very encouraging to see both Natura and Avon really increasing the investment into that. We do see and we talked to Jan and JP the opportunity to potentially combine efforts on that, creating eventually common platforms that are scalable, that we can accelerate the rollout, not only in Latin America, but some of the international markets. And at the same time, this combination creates an opportunity for us to even increase the investment in some of those strategic areas. So we are really encouraged not only by the alignment on the strategic view of how direct selling is evolving into the social selling platform and now our capacity to significantly increase the investment in those areas. And I would expect that you will speak to this is going to be critical in terms of stabilizing Avon and driving a resumption of growth. And can you give us a sense of what the time frame might be for this piece of the plan? So the time frame, 1st of all, as you know, we first needed to get all the regulatory approvals and the closing, which we expect to be Q1 2020. And after that, probably, we believe that the assessment, the integration and how we can scale up those platforms, I would probably say within 18 to 24 months. Our next question comes from Olivia Petronello, JPMorgan. I have two questions actually. The first one is, when we look back in your Investor Day, you talked about a little bit of the target in terms of channels that you would like to not feel like in the long term. I'd like to know where that stands after this acquisition, if you look at the Q2, to 425, what do you expect direct sales online and the traditional retail channel to account for in terms of sales? And my second question is regarding Avon. So when you look back at the company, we see a few challenges, maybe in some regions or in terms of profitability. I would like to know what if and if you have already mapped or what are your plans to tackle these challenges in those specific regions? Thank you. Speaking here. In terms of the guidance of shape of channels, as we referred to, So far, it doesn't change at all. I recall that we said that there's a significant shift towards digital, but a lot of that digital is performed by our own consultants in the case of Natura and also retail are also performed by our consultants there. So this is in line with Avon's efforts to modernize its commercial model as well. So I don't foresee any significant change in that guidance at this point in time. Yes. And Olivia, just to add on JP and your question about mapping the profitability in the regions, of course, as part of our diligence, we have mapped conversations also with Jan and the team, understanding what are the opportunities. Some of those, again, it's already mapped within the open up strategy of Avon. And I think our goal would be to continue to help them implement those strategies that will improve profitability in some of those markets that I think we're referring to. But we believe that we can amplify and accelerate that now with the scales and the synergies that comes from the combination. The next question comes from Tobias Stingelin, Citibank. Thank you very much. Just a quick clarification, please, in regards to the financials. You mentioned that the net debt of Avon was about $1,060,000,000 but you're not including the C convertible, which you will have to probably repay, right? Yes, it is. You have to take into account that the part of the debt that triggers the exploration of the need to be covered by excess is 1 point to 1. That's why I think the acceleration that you will be made. Sorry, I wasn't able to hear anything. I think the connection is pretty bad. Sorry. No, it's still pretty bad. I don't know if it's just my line, but I'm having issues, I think. Okay. I'll try to close it now. That's okay? Can you hear? Yes, I think it's a little better. What happens that the you have to take into account that the part of the debt that has the clause of consideration is €1,100,000,000 that you have to sum the €200,000,000 of the 6 different shares, and that's the €1,600,000,000 that we sum up. That's the amount that we are considering here. Okay. That's great. But just thinking that in terms of the valuation at the end of the day, you said that you have 1.01 is 1.7, close to 1.7, right, because you have besides it. Sorry, thank you, Tafir. Just second question, Natura never really integrated such a guest and even before that to mention that I think you have a Brazil autonomy and so on, in Brazil in order to deliver in other markets deliver synergies you have to integrate the assets. So can you just give us an idea like I don't want to talk about management because as you said, I do not need to talk about structures. Can you just give us an idea about the roadmap? Are you going to create teams, integration teams, 2 different platforms, for instance, running the same systems like the same ERPs. Could you get a sense about how complicated this might be? Tobias, it's good to hear. Listen, we've been, as you can appreciate, spend a lot of time in discussing how to view this integration in the best possible way. And again, with the same mindset to really preserve the focus on execution where we think that it's required to focus. And that's kind of the reason why we are envisioning to have 4 operating fields. 1, that really focuses on Latin America, including Brazil, for Matura and Avon because that's where the synergies are. And as you can and kind of anticipated the idea is to have a little more coordination and similarities in terms of platform, technology, IT that can better serve the consultants and representatives. Another operating CEO to focus on international markets for Avon and Aptura, which is primarily today is Avon. So it's almost like business that use on Avon. And over time, we believe that there is a huge opportunity to start bringing Natura portfolio, Natura brands, eventually even The Body Shop in the future. And that's another focus area. And we're going to continue to keep the on The Body Shop as David Gordon is doing the transformation with all the support from the group as well as EASL. So we think that that's the best approach to keep the focus and at the same time capture the synergies and the opportunity to drive growth. Okay, great. Just like a high level, like the systems for Interim Brazil, do they run kind of the same platform or kind of issues that we have to invest? You said you have like $100,000,000 $25,000,000 that you have to invest in order to get the synergies, are they related to kind of investing technology, integrating the different platforms and so on? Rafael, JP is speaking here. So even before I get into the specifics here, just recall that, yes, we are going to deploy a dedicated team to focus on the integration and to plan it to the highest level of detail in all work fronts. So that starts tomorrow, I guess. And when it comes to infrastructure, which includes data, which is the key for our business, is to know as much as possible of our consultants and their clients' and transform that information into better business opportunities for them, right? No doubt, we're going to integrate that backbone somehow. We still need to learn all the details of Ava already has available and see how to best monitor those assets, those solutions. But that is a key element to enable better businesses for the 2 brands. Just a final question. Congratulations again on the deal. Just given that we are on the phone and the kind of the Q1 in Brazil was 3 weeks. Can you just give us a trend of what's happening really in the operations as we speak? Because I think the M and A agenda has been great. Looking specifically both trends, for instance, in Brazil in regards to recovery of the sales, these were kind of pretty tough and also the FX is kind of a headwind for margins. Can you give us an idea of what's going on now in Brazil, please? It's obvious. I can only talk on behalf of Natura at this point. And we are pretty confident with our operation at this point in time. You know that the market itself is a bit depressed, but we face similar situations over the last 2 or 3 years as we are facing other geographies like Argentina currently. But we are pretty confident on the months ahead for this year. Okay. Congratulations again. Next question, Ruben Coutu Santander. Good morning, everyone. My first question, can you share your initial thoughts on the 2 companies' cultures? What are the key differences you're recognizing both? And why is it the plan to convert if even exists a plan to converge in terms of integration? Interested from the stance on what will be the company's stance towards China, for instance. It will be great to hear a little bit more on this. And then my second question, I wanted to go back on the topic of Avon's pricing for another question. I think Avon faces a similar issue that Natura faced at The Body Shop, which is heavy discounts. The overpromoted situation of Avon is somewhat enough a global issue or it's like some company specifics. Can you talk a little bit more on that? Or could we expect Avon to be somewhat of a combined brand within the company's portfolio? That would be great to hear as well. Thank you. Ruben, it's Roberto here. So first, in terms of culture, actually, we are super excited Avon joining because there is a lot of alignment, not only in terms of the heritage, indirect selling, the social responsibility, the power of women, the impact in society, but even the model of direct selling. Few companies that really started direct selling, very similar ethics in how to work with the consultants and representatives. Therefore, we're actually very encouraged by the alignment of the culture and the opportunities actually of those organizations coming together. Regarding the opportunity in China, it is something that we're going to explore. Of course, as we've been talking about, even during our Investor Day, Asia and China is a big opportunity. How we're going to really take that through and the opportunity to think about now a much broader portfolio It is something that is part of our strategic vision for this combination. And then regarding overly promoted, it is clearly kind of already the open up strategy that Jan presented, which is by reducing promotion, we at the same time need to enhance brand presence and rejuvenation, which is part of the strategy of Open Up Avon being implemented. Our goal and what we believe we can have is to amplify and accelerate those initiatives with everything that comes with the group. That's great. Thank you. Our next question comes from Gustavo Oliveira, UBS. Hi, good morning, Fran. Thank you for taking my questions. I want to understand in terms of synergies, if you have already identified any tax synergies or liability managed synergies potentials and what could those be? And also I'd like to understand, Filipe Fornillo, perhaps how you're thinking about the financial leverage post deal? I think there is an increase in net debt by the amount that you're paying for the Series C and how you think that evolving going forward? And the last question is a bit more on the possibility of revenue synergies. There is a new data point that you presented in the presentation, which is quite interesting that you only have 482,000 consultants that overlap in a base of 4,100,000 consultants. I don't know if you were surprised when you compare that, if you were surprised with that low overlap. And if you could help us understand why you think that's happening, if that's a big opportunity that you could explore or not, right? So those are the questions I'd like to ask. Okay. Thanks, Gustavo. Regarding the first question on the synergies on Trex and others, I think that's something that we will work in due time. We're going to be maybe indicated. So far, we stick with the guidance that we gave out. But I think that as a global presence of geography and companies, I think that's something that we should definitely consider. And that's something that both companies and the future, we want to work on that. So I believe that it's possible, but it's too early for us to read any guidance or any information specific. In terms of leverage, if you take the closing 2018 numbers from both companies, we're going to end up with a simple consolidation with the net debt EBITDA about 3x, a little bit below 3x. So it's not that leverage. Of course, if you take both companies individually, Natura is 2.71, remember we released that. Avon is about 3x. So the combined will be a little bit below 3x. So I don't think this is something that should be increasing or even changing the profile that we have today. But I don't understand this point because you would have to add the €530,000,000 for the CEC, wouldn't you? No, we're not considering that amount. That should be something that will trigger going forward 2019, then you have to consider the EBITDA net results for 2019. So that number is not considered. But even if you put that number, it doesn't change much, it doesn't go much higher than that. I'll answer JT for the second question. So starting from a consumer point of view, so there are households consuming one brand but not the other. And so there are opportunities to introduce the other brand to new households, of course. Now similarly, the opportunity is repeated with consultants. Now we do think, and Roberto has already stressed that, that the brands are to remain independent, right? They have their own identity. The commercial structures will remain independent with separate goals. So it's up to us to create new services for the consultants to make their lives easier so that they will be naturally attracted to one brand or the other in addition to the one that they already represent. So we do see that the possibility of this overlap going up in time. This concludes today's question and answer session. I would like to invite Mr. Roberto Marquez to proceed with his closing statements. Please go ahead, sir. Thank you all very much for joining the call. If there are some other questions, please forward to our Investor Relations team, and we'll be gladly to answer those. Again, this is a very exciting day for us as we take this another important transformation step in our journey to become a global multi brand channel group. There are 2 quick steps to go and we will update you along the way. So we look forward to our future exchange. Thank you again for joining us at the short notice and have a great day. Thank you everybody. That concludes the Natura audio conference for today. Thank you very much for your participation. Have a good day.