Avon rejects $10 billion takeover bid from Coty
By Phil Wahba
(Reuters) - Coty Inc disclosed on Monday that it had offered $10 billion for Avon Products Inc but the larger company, which is grappling with sliding sales and a bribery probe, rejected the bid as too low and "opportunistic".
Combining Coty, maker of Stetson aftershave and Beyoncé fragrances, with Avon, the world's largest direct seller of cosmetics, would give Coty less reliance on fragrances and a bigger share of growing overseas markets.
Investors sent Avon's stock soaring as high as $23.38 on Monday after news of Coty's offer. The shares closed up 17.3 percent at $22.70.
Coty Chairman Bart Becht said in an interview that Coty and Avon started talking a few months ago about a merger that would have had Avon buying Coty in exchange for shares.
He said when no offer came from Avon, Coty made a verbal offer, followed by three letters last month to Avon Chief Executive Andrea Jung.
"Their board fully acknowledges the financial and strategic rationale, so it is something that should happen," Becht said.
Avon declined to address Becht's comments.
"We would think they would be very open to a takeover," Barclays analyst Lauren Lieberman wrote in a note to clients, referring to Avon's shareholders. Continued...