Avon shares shot up for more than 25% before the opening bell.
The deal is broken into two parts; a $435 million investment by Cerberus in Avon Products in a preferred stock deal and another $170 million that is being used to buy an 80% stake in Avon's North American business.
Once the preferred stock deal hits its $5 strike price and converts, it will translate to a stake of more than 16% for Cerberus.
Cerberus will also add two executives to Avon Products' board and Chan Galbato, CEO of Cerberus' affiliate Cerberus Operations and Advisory Co. will become non-executive chairman of the Avon Board.
Six other executives on Avon Products' board will step down and the makeup company and the private equity firm together will select two more directors, they said in a joint statement announcing the deal.
The Wall Street Journal was first to report the news late Wednesday, December 16.
Banks Goldman Sachs and Centerview Partners advised Avon on the deal.
The deal represents a big bet for Cerberus, which raised a fund for more than $2 billion in 2013 and reportedly planning to raise another $3 billion fund this year.