Good morning, ladies and gentlemen. Thank you for waiting. We would like to welcome everyone to Natura & 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. Should any participant need assistance during this call, please press star zero to reach the operator. I'd like to pass the floor over to Mr. Roberto Marques, Executive Chairman of the Board of Natura & Co.
Good morning to all of you. Thank you for joining us on this call. I'm very excited. 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 & Co group and creating a leading global direct-to-consumer beauty group. We are indeed bringing together two industry leaders with strong commitment to making positive social impact and empowering women. I'm joined on this call by João Paulo Ferreira, Natura's CEO. I'm also very pleased to welcome Jan Zijderveld, CEO of Avon Products, who will share with us his perspective on the combination. We will run you through the main highlights of the transaction. We'll then be happy to take your questions. Let me begin on slide three with the headline messages of this transaction.
By joining with Avon, Natura & Co will become the world's fourth-largest pure-play beauty company, with combined gross sales of about $10 billion. This combination marks another transformation step towards building a global, multi-brand, multi-channel group reaching over 200 million consumers daily through iconic brands, serving various consumer profiles and distribution channels. We are uniting two purpose-driven forces that believe that business can be a force for good and are committed to generating social and economic value, promoting sustainability, and the empowerment of women. By leveraging Natura expertise, the combination will 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 synergy of between $150 million and $250 million annually. We will develop all those points throughout the presentation. Before that, let's look at the key transaction and highlights on slide four. The transaction we are announcing today is an all-share transaction under which Avon 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 $3.7 billion. The proposed parity will give Avon's current shareholders ownership of 24% of the combined company, while Natura & Co shareholders will hold the remaining 76%.
The goal is to list the group on São Paulo B3 market with a public float 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 five. The transaction has a powerful and compelling strategic rationale, accelerating the 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 & Co vision of making a positive social and environmental impact as part of our triple bottom line approach. Second, 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. Third, the combination will focus on driving growth and invest in three strategic areas: Digital commerce, research and development, and brand initiatives. Those investments will be enabled by important synergies between $150 billion-$200 billion estimated on annual basis, which by the way, we targeted to achieve within 36 months. Those synergies are principally across Brazil and Latin America. The group that results from today's combination is a truly multi-channel direct to consumer leader, able to reach more than 200 million consumers daily through its network of 6.3 million national consultants and representatives with over 3,200 stores and its growing digital platform.
Finally, the new combined entity 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. I'm super pleased to hand over to Jan to present Avon's perspective. Jan, welcome, and I'll turn to you.
Thanks a lot, Roberto. Now moving to slide six. 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 Her 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. The Avon Foundation for Women, which was founded in 1955, has contributed over $1 billion to date. Turning to the components of our business.
The majority of our revenue in 2018 came from our beauty categories. 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. Turning to slide seven. 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 turn around the company. Slide eight outlines our Open Up Avon 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 one 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 Avon team members for their unwavering dedication, and hard work, and passion. Their incredible efforts have created positive momentum and built a foundation that is now being positioned to succeed in the future. With that, I will turn back to Roberto.
Jan, thank you very much. 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. Again, we look forward to start working and getting to know your team, and congratulations again on the turnaround plan. Let me now move to slide nine. As I mentioned in the introduction, this is another transformation step in Natura & Co. journey to constitute a purpose-driven, multi-brand, multi-channel global group that brings under the same roof four leading business in a portfolio of iconic brands. We are going to detail that journey. It began actually with one store in São Paulo exactly 50 years ago when Natura was founded. In 1990, we saw the first step in the internationalization. We moved 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 multi-channel development with The Body Shop. 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 two complementary concepts, autonomy and interdependence. 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 &Co is a purpose-driven group committed to the triple bottom line. Our purpose is to nurture beauty and relationships for a better way of living and doing business. 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 João Paulo Ferreira to comment on the new scale of the group. Over to you, JP.
Thank you, Roberto, and hello, everyone. As you may be aware, Natura is celebrating its 50th anniversary this year. What better gift could we wish for? I have already mentioned on other occasions that this is only year one 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 Natura &Co to significantly advance in the global beauty rankings. The combined company is expected to have gross revenues of above $10 billion US. Upon closing, we'll have more than six million 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 multi-channel network.
Leveraging our beloved brands, our common passion for relationships, and our multi-channel capabilities, the now expanded group will bring beauty to over 200 million consumers across the world anytime, anywhere, every day. On slide 11, you see that with this transaction, Natura &Co 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 four million consultants and representatives who 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 now almost 100,000 consultants who have already bought into this combination even before it was finalized, so to speak, by selling both Natura and Avon products. We expect this number will increase over time as the combination also builds on the respective strengths of Natura &Co and Avon 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 color and face care, and our combined meaningful presence in personal care. Along these core beauty categories, the combination also takes Natura &Co into Fashion & Home, which is a category with good development potential. No doubt, there are significant growth opportunities ahead. Let me hand back to Roberto.
Thank you, JP. Let's move to slide 13. Synergies are obviously one of the catalysts of this transaction, but they are not a goal in themselves. Rather, they are a means to free up resources that can be reinvested in core capabilities that will accelerate our growth. For us, uniting Natura and Avon is clearly a growth combination. On this slide 13, we detail the three 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 fields as sustainable materials. 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. Natura's early success in digitalization, its operation is a scalable platform. We strongly believe further upside can be generated by the combination of our two companies. Indeed, we believe it unlocks potential to implement innovative initiatives and create further value by leveraging the group's scale and know-how. 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 four different businesses to grow other brands.
Along the lines of what we discussed very recently at our investor day, with Natura helping The Body Shop in Latin America, and conversely, The Body Shop guiding Natura into Asia. A third key aspect is the potential to optimize Avon's Brazilian operation by harnessing Natura know-how and capability. The fourth is fully capitalizing on the powerful multi-channel platform that Natura &Co has become to better serve consultants and consumers, giving them access to now two iconic beauty brands. This, no doubt, should result in increasing consultants and representative retention, unlocking further growth catalysts. Let's move to slide 14. This investment in the strategic areas that I just mentioned will be enabled by important targeted 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's more than 6 million consultants and representatives.
We have extensively mapped synergies and estimated them in a range of BRL 150 million to BRL 200 million 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 three major buckets. The first is low sourcing. As you know, procurement is already one of the main areas of the synergies within Natura & Co, as we present at our recent investor day, and we see a strong potential to enhance that to optimize the chasing of raw materials, freight and warehousing, advertising, and catalog, and back-office functions. The second 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 the synergies is a one-time of about BRL 125 million, which will be incurred between 2020 and 2022. The capture of these synergies 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 Natura current shareholders would own 70% of the combined company, and Avon shareholders, the 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 16, 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 brand while implementing the independent business model already in place within Natura & Co. This company will maintain its headquarters where they are presently located. We do envision four major business led by four operating CEOs, Natura and Avon Latin America, Avon and Natura International, The Body Shop, and Aesop, which will both continue as standalone business units. We also plan to create the position of sustainable growth officer to help focus on long-term growth and ensure better coordination among the business and brands for the benefit of the group. Finally, the combined companies board will reflect the relative ownership of the new shareholder base.
After closing, the board will be comprised of 13 members, of which 10 members will be from Natura & Co, and three will be appointed from Avon. The three founders of Natura will remain as co-chairman of the board, and the 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 1.9 billion and gives it an enterprise value of BRL 3.7 billion. This implies a multiple of 9.5x, excluding the expected synergies, and 6.7x factoring in the full impact of the target synergies. This combination creates the fourth largest beauty player in the world, with annual revenues exceeding BRL 10 billion. It also creates a leader in direct-to-consumer, which, daily interaction with a base of more than 200 million consumers, like no other company in the beauty industry.
With the addition of Avon, Natura &Co is taking another transformation step to be the multi-brand, multi-channel group. Uniting these two purpose-driven forces will 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 the implementation of its Open Up Avon strategy. The transaction is driven by a powerful industrial logic that will help accelerate growth by reinvesting the target annual synergies of between $150 million-$250 million in areas like digital, product innovation, and brand initiatives. With this, thank you very much for your attention, and we are now happy to take your questions. José Antonio Filippo, CEO Co of Natura &Co. JP, here also with me, will take your questions now. Thank you.
Ladies and gentlemen, we'll now begin the question and answer session. If you have a question, please press the star key followed by the one key on your touchtone phone now. If at any time you would like to remove yourself from the questioning queue, press star two. Our first question comes from Thiago Macruz, Itaú.
Good morning, guys. First, I would like to congratulate you for this deal. We know it must have been a lot of work to you all. I have a couple of questions. First, I understand the rationale of this transaction. There are substantial synergies being captured. My question here is, isn't it hard to move on with the digital transformation in a tourist core business in LATAM at the same time that the team is conducting a massive integration of Avon? Is it possible to look towards the future at the same time as digesting this asset? That's my first question. 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 two questions. Thank you, guys.
Hey, Thiago, good morning, and glad to hear. 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. 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.
Hi, Thiago. As it comes to digital transformation, as you probably recall, the approach we have been following, and it's my understanding that Avon is following the same path, is 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. 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. Thank you. Just a follow-up, JP. 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? This is my last question. Thank you.
Hey, Thiago. As you can probably appreciate, we are not making any appointments today. Today is a day that we are celebrating the combination, and over time, we'll make those determinations. Thank you for the question.
Thank you.
The next question comes from Robert Ford, Merrill Lynch.
Hey, thank you. Congratulations on the transaction, and thanks for taking my questions. Roberto, at the Avon Investor Day last year, Jan said that 98% of Avon's volume was sold on promotion. Consultant turnover is high. Salespeople appear to be profit centers. Market shares are eroding, et cetera. Right? Can you tell us a little bit about how you establish comfort with the Avon brand and your ability to resurrect it with a consumer that may think of it as their mother's or grandmother's brand or just a cheap product? How do you think about the role of the brand in the Natura portfolio over the longer term?
Hey, Bob. Good morning. Thanks for the question. Listen, 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 revive the brand Avon, which has a tremendous penetration, has a very actually high likability across the globe with very low kind of rejection, which is really a diamond, as I think Jan likes to present the brand. We share the same optimism about the brand. What Jan has been doing in Open Up Avon is the transformation. A lot of changes on the footprint of Avon, reducing cost, et cetera, which we believe will allow with this combination to be accelerated. 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 ecommerce.
We think that the combination will amplify what's already in place with the Open Up Avon strategy. Therefore, we're going to be able to capture those benefits even sooner. 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 Bob. Thanks, team. I'm curious when it comes to the housewares and fashion business, how are you thinking about those product lines over the longer term? Then I guess when it comes to brand, certainly the systems and the digital platform is going to be a major component of that. I was wondering, if you look at that element of the turnaround piece, this is going to be an extension of the Natura ERP and the replication of the digital tool for Avon or it's something else. Could you talk a little bit about the expected timeframe and the cost of that portion of the consolidation plan, please?
Hi, Bob. JP speaking. Let me start with home and fashion. We see this as an enormous opportunity. Natura had looked at that and even tried prototypes of home and fashion portfolio a couple of years ago. We see that mainly adjacent to our beauty value proposition. Of course, it drives additional value for our network of consultants and representatives. We do see that there's potential there. We don't know much about it, but we learned from Avon's team of that potential reconfirmed by them, and also the efforts to make it more effective, efficient that Jan has already presented in previous occasions. We like that idea, and we'll pursue it to our best capabilities.
Bob, you had a second part of your follow-up question. We couldn't hear well. Could you repeat?
Yes. I was just asking about how you're thinking with respect to the systems and the digital platform at Avon. I would expect that that's a key piece of turning around the brand, addressing inefficiencies, et cetera, and keeping across, maintaining better visibility. As you think about that, do you pursue this platform and obviously with the budget of BRL 230 million on a multi-year period of time that Avon was pursuing last year? Would you pivot a little bit and extend the Natura CRM, maybe move a little bit more rapidly and just replicate teaching that product for Avon, or do you pursue that independent path? I was asking about the timeframe for that and the cost of that piece of the consolidation plan.
Okay. Clearly, both companies are very much aligned in terms of evolving direct selling into a social platform, a social selling. 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. At the same time, this combination creates an an opportunity for us to even increase the investment in some of those strategic areas. We are really encouraged, not only by the alignment on the strategic view of how direct selling is evolving into the social selling platform, but now our capacity to significantly increase the investment in those areas.
I would expect that the speed to do this is going to be critical in terms of stabilizing Avon and driving a resumption of growth. Do you give us a sense of what the timeframe might be for this piece of the plan?
The timeframe, first of all, as you know, first we needed to get all the regulatory approvals and the closing, which we expect to be first quarter 2020. After that, probably we believe that the assessment, the integration, and how we can scale up those platforms, that would probably stay within 18 to 24 months.
That's very helpful. Thank you again, and congratulations.
Our next question comes from Olivia Petronilio, J.P. Morgan.
Hi, guys. Thanks for taking the question. I have two questions, actually. The first one is, when we look back into your Investor Day, you talked about a little bit of the target in terms of channels that you would like to see Natura like in the long term. I'd like to know where that stands after this acquisition. If you look at Natura for 2023 to 2025, what do you expect direct sales, online, and the traditional retail channel to account for in terms of sales? My second question is regarding Avon. When we look back at the company, we see a few challenges, maybe in some regions or in terms of profitability. I would like to know if you have already mapped or what are your plans to tackle these challenges in those specific regions. Thank you.
Let me give. Olivia, J.P. speaking here. In terms of the guidance of shape of channels as you refer 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. Also retail, also performed by our consultants there. 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. Yeah. Olivia, just to add on J.P. and your question about mapping the profitability in the regions, of course, as part of our diligence, we have mapped, in conversations also with Jan and the team, understanding what are the opportunities. Some of those, again, it's already mapped within the Open Up Avon strategy of Avon.
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 you are referring to. We believe that we can amplify and accelerate that now with the scales and the synergies that comes from the combination.
Great. Thank you.
The next question comes from Tobias Stirnberg, Citibank.
Yes, thank you very much. Just a quick clarification please in regards to the financials. You mentioned that the net debt of Avon was about BRL 1.06 billion, you're not including the Convertible security, which you will have to probably repay, right?
Yes, Tobias. You have to take into account that the part of the debt that triggers the acceleration that will be needed to be covered by WEXTOX is 1.1. That's why I think the calculation that you made. We have to add up to BRL 500 million for the C share. That's 1.6.
Sorry, can you repeat that? I wasn't able to hear anything. The connection is pretty bad.
Sorry. Talk closer to the mic.
No, that's okay.
Okay, let me repeat. Can you hear me now?
It's still pretty bad. I don't know if this is my line, but I'm having issues, I think.
Okay. I'll try closer now. That's okay? Can you hear?
Yeah, I think it's a little better.
That's it. What happens is that you have to take into account that the part of that letter that has the clause of consideration is BRL 1.1 billion. You have to sum the BRL 500 million of the preferred shares, and that's the BRL 1.6 billion that we sum up. That's the amount that we're considering here.
Okay, that's great. I'm just thinking that in terms of evaluation at the end of the day, it's not BRL 1.01 billion, it's BRL 1.7 billion, close to BRL 1.7 billion, right? Because you have BRL 1.6 billion. Sorry. Thank you. It's clear now. Just a second question. Natura never really integrated such a big asset, and even if Roberto mentioned that I think you have a degree of autonomy and so on, in Brazil, in order to deliver in other markets, deliver the synergies, you have to integrate the assets. Can you just give us an idea? I don't want to talk about management because, as you said, you're not willing to talk about structures. Can you just give us an idea about the roadmap? Are you going to create teams, integration teams, different platforms, for instance, running the same systems, like the same ERPs?
Just to get a sense of how complicated this might be.
Hi, Tobias. Roberto here. We've been, as you can appreciate, spending a lot of time in discussing how to do this integration in the best possible way, again, with the same mindset to really preserve the focus on execution where we think that it's required the focus. That's kind of the reason why we are envisioning to have four operating CEOs. One that really focuses on Latin America, including Brazil, for Natura and Avon, because that's where the synergies are. As you can 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 Natura, which is primarily today is Avon.
It's almost like business as usual in Avon. 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. That's another focus area. We're going to continue to keep the focus on The Body Shop as David Boynton is doing the transformation with all the support from the group, as well as Aesop. 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, the systems, for instance, in Brazil, do they run kind of the same platform or should we anticipate the kind of issues that you have to invest? As you said, you have BRL 100 million, BRL 35 million 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?
Hi, Tobias. JP speaking here. 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. That starts tomorrow, I guess. When it comes to our 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 what Avon already has available and see how to best manage those assets, those solutions. That is a key element to enable better businesses for the two brands.
Just a final question. Congratulations again on the deal. Just given that we are on the phone and that kind of the first quarter in Brazil was pretty weak, can you just give us a trend about what's happening really in the operations as we speak? Because I think the M&A agenda has been great at looking specifically for trends, for instance, in Brazil in regards to recovery of the sales that 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?
Hey, Tobias. I can only talk on behalf of Natura at this point. We are pretty confident with our operation at this point in time, even though that the market itself is a bit depressed. We faced similar situations over the last two or three years as we are facing other geographies like Argentina currently. We are pretty confident on the months ahead for this year.
Okay. Congratulations again.
Next question, Ruben Couto, Santander.
Good morning, everyone. My first question, can you share your initial thoughts on the two companies' cultures? What are the key differences you recognize in both, and what is the plan to converge this if even exists a plan to converge in terms of integration? I'm particularly interested from the stance on what will be this company's stance towards China, for instance. It will be great to hear a little bit more on this. A 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 of a global issue, or it's like some company specifics.
Can you talk a little bit more on that? Could we expect Avon to be somewhat of a combat brand within the company's portfolio? That would be great to hear as well. Thank you.
Hi, Ruben. It's Roberto here. 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 in direct selling, the social responsibility, the empower of women, the impact in society, but even the model of direct selling. Two companies that really started direct selling, very similar ethics in how to work with the consultants and representatives. Therefore, we 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 opportunities to think about now a much broader portfolio.
It is something that is part of our strategic vision for this combination. Regarding overly promoted, it is clearly part of already the Open Up strategy that Jan presented. Which is by reducing promotion, we at the same time need to enhance the brand presence and rejuvenation. Which is part of the strategy of Open Up Avon being implemented. Our goal and what we believe we can add 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 everyone. 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? Also like to understand, Filippo, from you, perhaps how you're thinking about the financial leverage post-deal. If there is an increase in net debt, by the amount you're paying for the CSC, and how you think that evolving and going forward. The last question is a bit more on the possibility of revenue synergies. There is a new data point being presented in the presentation, which is quite interesting, that you only have 482,000 consultants that overlap in a base of 4.1 million consultants. I don't know if you were surprised when you compare that, if you were surprised with that low overlap.
If you could help us to understand why you think that's happening, if that's a big opportunity that you could explore or not, right? Those are the questions I'd like to ask.
Okay. Thanks, Gustavo. Regarding the first question on the synergies on tax and others, I think that's something that will go work in due time, we're going to be maybe indicated. Far, we stick with the guidance that we gave out. I think that as a global presence, geography and companies, I think that's something that we should definitely consider. That's something that both companies in the future will want to work on that. I believe that it's possible, but it's too early for us to release 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 three times. A little bit below three times. It's not that leverage. Of course, if you take both companies individually, Natura is 2.71.
Remember we released that. Avon is about three times. The combined will be a little bit below three times. I don't think this is something that should be increasing or even changing the profile that we have today.
Filippo, I don't understand this point because you would have to add the BRL 530 million for the CSC, 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 result for 2019. That number is not considered.
Okay.
Even if you put that number, it doesn't change much. It doesn't go much higher than that. On to, JP for the second question.
Starting from a consumer point of view, there are households consuming one brand but not the other. There are opportunities to introduce the other brand to new households, of course. Similarly, the opportunity is repeated with consultants. We do think, and Roberto Marques has already stressed that the brands are to remain independent. They have their own identity. The commercial structures will remain independent, with separate goals. 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. We do see that, the possibility of this overlap going up in time.
Okay. Thank you.
This concludes today's question and answer session. I would like to invite Mr. Roberto Marques 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 glad 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, multi-channel group. There are few quick steps to go, and we will update you along the way. We look forward to our future exchange. Thank you again for joining us at a 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.