Avon rejects unsolicited takeover bid from Coty

Avon Products Inc. has rejected an unsolicited takeover bid of $10 billion from Coty Inc., a beauty company half its size.

At $23.25 a share, Coty’s cash bid was a 20 percent premium over Avon’s closing price on Friday, the Los Angeles Times reported.

In a note on its website, Avon said the offer "is opportunistic and not in the best interest of Avon's shareholders," the LA Times reported. The company revealed Coty had made another, private offer in March "that was substantially the same.” The note added, "Coty is attempting to obtain a ‘free look’ at Avon in the absence of any commitment whatsoever to close a transaction at any price," according to the LA Times.

Avon, the largest direct seller of beauty products, has struggled lately, MarketWatch reported. Demand for its products has declined, the company is under investigation for possibly violating the Foreign Corrupt Practices Act and CEO Andrea Jung is being forced out, the LA Times reported.

“It’s a low offer,” BMO analyst Connie Maneaty told MarketWatch. “Avon has been under-earning for years. Last year’s results were terribly depressed. Anybody who looks at Avon, whether it’s an acquirer or a new CEO, has a lot to work with. Avon’s incoming CEO will find fertile territory. The value in this long-underperforming business is starting to be unlocked.”

Coty owns Rimmel, Sally Hansen nail care and OPI Products, which it bought in 2010, in addition to perfume brands like Calvin Klein, the LA Times reported. Coty’s annual sales are $4.5 billion, according to MarketWatch, while Avon brings in $11 billion.

If the deal goes ahead, it would be the largest retail sector deal globally since Australia’s Wesfarmers Ltd. bought supermarket giant Coles Group in July 2007, MarketWatch reported.

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