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What happened?
As part of a $605 million strategic deal with Avon Products (NYSE:AVP), hedge fund Cerberus Capital Management will pay $170 million to acquire an 80% stake in the beauty care company's North American business unit and then take it private while also investing $435 million for a 17% stake in the cosmetics company itself.

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Does it matter?
Avon has been on a multiyear skid, with sales falling from $11.3 billion in 2012 to $8.8 billion last year. Trailing revenues over the past 12 months are just $7.6 billion. Sales in North America are doing even worse, falling for seven consecutive years, and they're down 17% so far in 2015. Division losses, meanwhile, have grown to $47 million. The rise of cheap cosmetics that are of good quality from rivals like Sephora has added pressure to Avon's business, making the cosmetic company's rejection of an $11 billion buyout from Coty (NYSE:COTY) three years ago a major missed opportunity.

The investment by Cerberus, therefore, is paltry in comparison, but it allows Avon to shed the one segment that was driving down the rest of its operations, while at the same time getting a cash infusion to help strengthen its balance sheet. Avon is also suspending its $0.24-per-share dividend to further that goal.

The cosmetics business has become much more competitive. Procter & Gamble (NYSE:PG) is also exiting the cosmetics business, announcing this past spring that it wanted to sell its beauty care division even though it represented a quarter of its revenues and profits. But segment sales have taken a hit from the number of rivals now in the space, dropping 12% on a 7% decline in volume.

Yet with analysts critical that Avon left money on the table and hedge fund Barington Capital -- which recently announced a 3% stake in Avon -- believing a division sale was not the appropriate course for the beautician to take, the deal has left many doubtful about the efficacy of the deal with Cerberus, particularly as it effectively creates two owners for one brand.

While the prospect of the beauty care company selling the business was not unexpected, the details are and they are apparently leaving a bad taste in many mouths. Avon Products has now agreed to shed what could have been a stable component had it shorn up the business instead of selling it, while opening itself up to the risks associated with operating solely in foreign markets.

Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Procter & Gamble. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.