Avon rejects $10bn takeover bid from Beyonce perfumer
Offer to buy troubled cosmetics company Avon Products dismissed as 'opportunistic'
STRUGGLING cosmetics giant Avon Products has rejected a $10bn (£6.2bn) takeover bid from celebrity beauty firm Coty after branding the offer opportunistic.
New York-based Coty, which makes Beyonce and Lady Ga Ga-branded perfumes, put forward a bid of $23.25 per share to buy Avon Products, which was 20 per cent above the firm's share price when the New York Stock Exchange closed on Friday.
While shares in Avon Products have plummeted 40 per cent over the last year, Coty's $10bn offer is still far lower than some investors believe the company is worth, according to The Times, which quotes "a source close to the talks" as saying: "The offer is so inadequate even Avon's worst critics say it is too low."
The 126-year-old cosmetics firm said yesterday that Coty had "substantially undervalued" it, according to Reuters. Avon's annual sales are three times higher than Coty's $4.5bn.
Coty, which made its bid on 7 March, has rejected claims that it is attempting a hostile takeover. The company says it would be willing to raise its offer if Avon can show it is worth more by opening up its books.
Avon's share price leapt 17 per cent on Monday, to $22.66, suggesting there is still confidence in the company. Linda Bolton Weiser, an analyst at Caris & Company, suggested to CNBC that Coty's bid had affirmed that its unique 'Avon Ladies' direct sales model was still valuable.
Avon has struggled to find its feet in emerging markets in Russia and Brazil, where sales have been poorer than expected. In China, Avon is under investigation following allegations of bribery. The company's chief executive, Andrea Jung, has announced she is to step down. ·