Avon Rejects $10 Billion Takeover Bid

by louabbott on April 2, 2012

Considering that Avon is the #1 company in global revenues in the entire Network Marketing / Direct Sales industry with over $11 Billion in annual revenues, the offer does look ‘dramatically low’ to me, at least on the surface.

Beauty company Coty said on Monday that it had offered to buy Avon Products for $10,000,000,000 and was willing to raise the price, but the bid was rejected by the cosmetics direct seller, which faces sliding sales in key markets and a bribery probe.

Avon Products

Coty, whose products include fragrances by celebrities including Beyoncé and Lady Gaga, said it had no plans to make a hostile bid, but had been “unsuccessful” in getting Avon to talk about a deal.

The fast-growing privately held company majority-owned by Joh. A Benckiser, is offering $23.25 per share, a 20% premium over Avon’s Friday closing price of $19.36 on the New York Stock Exchange.

In a statement on Monday, Avon rejected the offer, saying it “substantially undervalues” the company.

But analysts said Avon’s board should not dismiss the bid out of hand, given the company’s problems.

“It’s an opportunity that the board should seriously consider,” said Sanford C. Bernstein & Co analyst Ali Dibadj. Except for perhaps another direct seller, he added, there are few potential suitors for Avon.

Coty’s bid is not “dramatically too low,” he said, predicting Coty will come back with a higher offer.

Avon is searching for a new chief executive officer to replace Andrea Jung, who has held that post since 1999. It has said the new CEO will undertake a top-to-bottom review of the struggling company, which is dealing with a probe into whether it broke U.S. anti-bribery laws in China.

. . .
At Friday’s close, shares of Avon were down nearly 50 percent from a year and a half ago. Before Coty made its bid public, Avon was worth only about $8 billion, down from an all-time peak of $21.8 billion in June 2004. …

For the rest of the article, visit CNBC.com

Avon Financials are available here.

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