Avon Products Inc. named Johnson & Johnson executive Sherilyn S. McCoy as its new chief executive, signaling deepening resistance to a $10 billion takeover offer lodged by Coty Inc. a week ago.
McCoy, a vice chairman at J&J, lost the race to become the pharmaceutical company's next CEO in February, when Alex Gorsky was named to the post. She now faces the difficult job of crafting a new strategic plan for Avon and shoring up overseas operations, while dealing with federal investigations into possible bribery of foreign officials and fending off a takeover attempt that Avon says undervalues the company.
The 30-year veteran of J&J lacks deep experience with Avon's direct-sales model. At J&J, McCoy oversaw a number of operations, including pharmaceuticals, science and technology, information technology and the consumer business. The latter involved skin-care brands such as Neutrogena, Aveeno, Lubriderm, Clean & Clear and ROC, giving her some experience in products Avon sells as well as the complexities of managing an international operation.
"Sheri has a unique combination of strategic and finely honed operational skills, a significant turnaround track record, global experience and people leadership," said Fred Hassan, lead director of Avon's board.
J&J praised McCoy and said her reports would begin reporting to Gorsky.
Avon last week turned down an informal offer of $23.25 a share from smaller rival Coty, which despite having less than half Avon's revenue has launched a takeover battle backed by wealthy investors in Germany and the U.S.
Investors appeared to be betting some sort of deal could materialize. Ali Dibadj, an analyst at Sanford C. Bernstein, said the quick move to appoint a new CEO is a clear sign Avon is actively resisting Coty's offer. In early trading, Avon's shares fell about 2.5% to $22.85.
McCoy will also take a seat on Avon's board. Her predecessor, Andrea Jung, who ran the beauty company for more than a decade, will become executive chairman of the board. Jung agreed to surrender her CEO post in December following an outcry from investors.
Avon has faced deep investor dissatisfaction over the past year as it failed to deal quickly with poor results in important overseas markets as well as a messy federal probe into allegations of bribery of officials overseas.
Despite McCoy's reputation as a talented leader and quick learner, she could have a tough time running Avon as it fights an unwanted suitor and Jung remains in the picture, said an acquaintance of the new CEO.
"It is a very steep hill to climb," the acquaintance said. Further complicating matters, McCoy is limited in her ability to recruit talent from J&J due to limits on such solicitation by former executives, the acquaintance said.
At J&J, McCoy and Gorsky battled quality problems at iconic brands such as Tylenol that had battered the company's reputation. They included a series of recalls of Tylenol, Benadryl, Motrin and Zyrtec medicines due to problems that included metal shavings in some bottles, incorrect levels of an active ingredient and bad odors.
J&J knew McCoy wanted to be a CEO and might leave after her failed bid, but was surprised by her exit, the executive's acquaintance said. "Everybody's assumption was that a month after you lose the job, you're on board," the person said.
Avon, which has removed a number of high-ranking executives from their jobs in recent years due to the bribery investigation, had been looking for an external candidate since beginning the search for its new CEO. The company looked broadly for executives with experience in the consumer products industry, given the relative dearth of companies that follow direct sales models.
Jonathan D. Rockoff contributed to this article.
