Cosmetics maker Avon Products Inc. (NYSE: AVP) has rejected a hostile takeover offer of $23.25/share from privately held Coty Inc. The offer values Avon at around $10 billion.
Calling the offer “opportunistic and not in the best interest” of shareholders, Avon’s board said that it believed in the strategic direction of the company, that Coty’s offer “substantially undervalues” the company, that the board is committed to finding a new CEO, and that the Coty’s non-binding offer is not “real.” In its press release rejecting the offer, Avon noted:
Coty’s letter to Avon dated March 30 alludes to the possibility that, following diligence, Coty reserves the right to raise or lower its price to acquire Avon. In the final analysis, Coty is attempting to obtain a “free look” at Avon in the absence of any commitment whatsoever to close a transaction at any price.
Coty’s first offered $22.25/share for Avon earlier in March, but that offer was not made public. The Wall Street Journal cites a letter from Coty’s CEO to Avon in which the potential acquirer states, “If [Avon] can demonstrate that there is greater value than is apparent from publicly available information, we would be prepared to consider increasing the price of our proposal.”
Shares of Avon are up nearly 20% at $23.14 in pre-market trading this morning. The 52-week range on the stock is $16.09-$31.60.