Coty calling with USD 10 bln bid, but Avon says no

Avon has rejected a USD 10 billion buyout by another cosmetics company Coty. A statement released yesterday ( April 2 ) by Avon indicated that the unsolicited bid by Coty, worth USD 23.25 per share, undervalued the company. This is the second bid from Coty that Avon has rejected in the space of two weeks. Avon, which describes itself as the company for women, has had financial difficulties recently, and according to board of directors this, in part, motivated Coty's move. “Coty's indication of interest substantially undervalues Avon and is opportunistically timed,” reads the Avon statement. Avon's board of directors considered the indication of interest but judged it as not in the best interests of the company. The offer was considered noncommittal and would have allowed Coty to backout or drop the price. “Coty is attempting to obtain a "free look" at Avon in the absence of any commitment whatsoever to close a transaction at any price,” said Avon representatives. Avon's search for a new CEO was also mentioned in the press release, along with the claim that Avon has a bright future as an independent company. Francois Coty founded perfume maker Coty in 1904 in Paris. Now based in New York, the global company published revenues of around USD 4.1 billion for the year ending June, 2011. Specializing in door to door sales, cosmetics company Avon claims annual revenue of USD 11 billion and employs around 6.4 million sales representatives worldwide. Liam Lever, liam@romania-insider.com