Are there any regulatory or tax considerations associated with the Avon International transaction that could affect the stock price?

Regulatory / tax angle

The “probable sale of Avon International within 12 months” flagged in Natura’s Q2 release introduces a set of jurisdiction‑specific approvals and tax‑structuring steps. Avon’s operations span the U.S., Europe and a growing number of emerging‑market subsidiaries, so the divestiture will have to clear U.S. FTC/SEC, EU competition and local tax‑authority reviews. Any unexpected delay or a requirement to re‑price the transaction (e.g., a higher withholding‑tax rate on cross‑border payments) could compress the deal’s timeline and compress the cash‑flow benefit that Natura is counting on for its 2025 guidance. Historically, similar cross‑border brand sales in the consumer‑goods sector have moved the share price 3‑5 % on the day the regulatory outcome is disclosed, reflecting the market’s sensitivity to the certainty of the proceeds.

Trading implication

If the sale proceeds on schedule and is cleared without a material tax hit, Natura (NTCO) should see a near‑term upside as the market prices in the expected cash‑generation boost and the “greater visibility” to Latin‑American earnings. Conversely, any regulatory hold‑up, a tax‑re‑assessment, or a downgrade in the transaction price will likely trigger a short‑term sell‑off, especially on the NY‑listed ADR where the stock is more sensitive to U.S. regulatory news. From a technical standpoint, NTCO is holding above its 50‑day SMA and has formed a bullish flag on the daily chart; a break below the flag‑pole (≈ BRL 3.30) could signal the market is pricing in a regulatory shock.

Actionable take‑away

- Long: Keep a modest long position if the transaction stays on track and no adverse regulatory/tax news surfaces; target a 4‑6 % upside toward the next resistance level (≈ BRL 3.55).

- Protective stop: Place a stop just below the flag‑pole (BRL 3.30) to guard against a sudden regulatory or tax‑related downgrade.

- Watchlist: Monitor filings with the U.S. FTC, EU competition regulator and any cross‑border tax rulings in the next 4‑6 weeks; a negative surprise will likely break the technical base and open a short‑term correction.