Warren Buffett gives backing to improved bid for Avon cosmetics
WARREN Buffett yesterday gave his financial backing to a sweetened $10.7bn (£6.6bn) takeover bid from cosmetics firm Coty for its far larger rival Avon.
In April Coty made an offer to buy Avon, which is three times its size in revenue, for $23.25 per share.
It has since raised its offer 6.5 per cent to $24.75 per share, according to a letter Avon made public yesterday.
In the letter Coty said it had financial backing from parent group JAB Holdings and Buffett’s Berkshire Hathaway investment vehicle.
Unlike previous bids the Avon board did not reject the latest approach out of hand but said it would consider the proposal “in due course”.
But there are doubts that the deal will progress, with Coty setting a deadline of Monday evening for Avon’s board to co-operate.
Avon is considered vulnerable due to a low share price, falling profits and a US bribery probe.
“I don’t think they will [take up the offer]. They know that the current bid is too cheap,” said Michael Bigger, of trading firm Bigger Capital.
Shares in Avon closed down 3.3 per cent yesterday at $20.89.