Shares in Avon slide after Coty withdraws bid
SHARES IN AVON PRODUCTS fell more than 10 per cent yesterday after Coty withdrew its $10.7bn (£6.6bn) takeover bid, saying the world’s largest cosmetics direct seller had taken too long to respond to its sweetened offer.
Last week, fragrance company Coty raised its bid to $24.75 per share from an earlier $23.25 per share and brought in Warren Buffett’s Berkshire Hathaway to provide financial backing, giving Avon until Monday evening to respond.
Avon, which had rejected outright all of Coty’s earlier bids without entering into discussions, said on Sunday in a brief statement that it would consider Coty’s latest offer but respond within a week. Coty, which makes for perfumes for celebrities like Madonna and Beyoncé, said in a letter that after no one on Avon’s board returned its request for an explanation of why Avon needed more time to agree, it was pulling the offer.
“Your total lack of engagement with us leads us to believe that you remain reluctant to explore a friendly, negotiated combination on a reasonable timetable,” Coty chairman Bart Becht said in a letter to Avon’s board. “Two months is enough.”
Avon replied yesterday that it had responded “promptly” to Coty’s 9 May letter by disclosing it on 10 May and indicating that its board would consider the letter. However, on Monday, five days after sending its letter, Coty withdrew its proposal, Avon said.
The news leaves Avon shareholders relying on new chief executive Sherilyn McCoy to come up with a plan to turn around a company that has been struggling with plummeting profits on falling sales both at home and in some international market.