Coty, Inc announced today that they have offered $10 billion in cash to buy cosmetics giant Avon, which despite its track record of past successes has been struggling lately. According to the New York Times, "Coty said that it had made “extensive but unsuccessful discussions” with Avon and as a result decided to make its offer public."
Reuters updated the news 5 minutes ago by saying that Avon had rejected the bid. Th unveiling of the process of transaction reveals an aggressive and determined Coty, Inc which at the same time protest that they are not interesting in making a hostile takeover bid offer although they sound like they are trying to drive a wedge between executives and share-holders...
"We do not understand how your Board's unwillingness to discuss our proposal can serve the best interests of Avon's shareholders," Coty Chairman Bart Becht said in letter to be delivered to Jung on Monday morning.
Coty have already shed light on their vision. The new company would be called "Avon-Coty" and Coty's products would benefit from the direct-sales model and experience of Avon although the latter has been showing sure signs of decline in the United States, Brazil and Russia.
Avon shares have plunged more than 50% over the past 18 months. Their value is now estimated by Reuters at $8 billion, a steady drop from an all-time high at $21,8 billion in June 2004. Avon have so far rejected Coty's offer on the grounds that it undervalues them.