Reuters: Deals: Avon rejects $10 billion takeover bid from Coty

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Avon rejects $10 billion takeover bid from Coty Apr 2nd 2012, 12:20 Tweet Share this Email Print Related News Zynga buys OMGPOP games company for $200 million: source Wed, Mar 21 2012 Avon Ladies see need for complete company makeover Fri, Mar 16 2012 Related Topics Deals » Global Deals Review: 2011 Q3 » Global Deals Review: 2011 Q2 » Global Deals Review » Hot Stocks » Asian Markets » Inflows Outflows » Avon products are seen at a Grameen America open house at St. John's University in New York April 18, 2009. Credit: Reuters/Eric Thayer Mon Apr 2, 2012 8:20am EDT (Reuters) - Beauty company Coty Inc said on Monday that it had offered to buy Avon Products Inc for $10 billion, but the cosmetics direct seller said it was rejecting the bid. Coty, whose products include fragrances for such celebrities as Beyonce and Lady Gaga, said it had no plans to make a hostile bid, but had been "unsuccessful" in getting Avon to talk about its offer. Coty, a privately held company majority owned by Joh A Benckiser, is offering $23.25 per share, or a 20 percent premium over Avon's Friday closing price of $19.36 on the New York Stock Exchange. Avon said it was rejecting the offer because it "substantially undervalues" the company. Shares of Avon rose 18.9 percent to $23.01 in premarket trading. Coty said it went public with its offer after sending Avon Chief Executive Officer Andrea Jung three letters detailing the bid. "We do not understand how your Board's unwillingness to discuss our proposal can serve the best interests of Avon's shareholders," Coty Chairman Bart Becht said in letter to be delivered to Jung on Monday morning. Coty said it would be willing to raise its offer if Avon can show there is greater value in the company by opening its books to the company. Shares of Avon, which is cutting jobs, had plunged nearly 50 percent over the last year and a half. The company is worth only about $8 billion today, down from an all-time peak of $21.8 billion in June 2004. Coty said it would call the new company "Avon-Coty." It also said Avon's door-to-door direct sales model would help Coty's beauty brands. Avon is searching for a new CEO to replace Jung, who has held the reins since 1999. But the company is facing a long decline in sales and the number of sales representatives in the United States. During the holiday period, sales in key emerging markets like Brazil and Russia fell. (Reporting By Phil Wahba in New York; Editing by Lisa Von Ahn) Global Deals Review: 2011 Q3 Global Deals Review: 2011 Q2 Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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