Avon says $10B buyout offer isn't good enough

Avon, one of the world's most recognizable cosmetics brands, appeared to be jockeying for a higher buyout bid Monday after it tossed out a $10 billion takeover offer by beauty company Coty.

Even as Avon faces a slide in sales and a bribery probe, the company said it was worth much more.

Coty, whose top products include perfumes for Beyoncé, Lady Gaga and Madonna, sent outgoing Avon chief executive Andrea Jung three letters in March detailing the proposal. Coty also said it was willing to raise its bid and that it made its offer public after failing to get Avon to sit down and discuss a deal.

Avon said in a statement Monday that Coty's offer "substantially undervalues" the company and hung high hopes on a new chief executive who could create a "greater opportunity" to increase Avon's value.

"The new CEO should have time to develop a strategy and make that transparent to the market before Avon should ever be dealing with a buyout offer," said Shawn Gault of Kempner Capital Management, which holds 218,135 Avon shares. "There is a lot more value in Avon."

Coty said it had no plans to go hostile and that it would be willing to up its offer if Avon would open its books.

Coty is confident it can line up the necessary financing to pull off the acquisition of a company with sales nearly three times greater than its own.
It said it would call the new company "Avon-Coty."

(with Reuters)