Avon rejects Coty's acquisition offer
Says proposal \'does not reflect the fundamental value of Avon\'
Avon Products Inc has issued a comment rejecting an unsolicited, non-binding indication of interest from Coty Inc. Earlier today, Coty publicly announced an offer to acquire Avon for $23.25per share in cash in a mutually agreeable and negotiated transaction. Coty announced that it was making its proposal public in order to inform Avon’s shareholders of the significant value in a transaction, following extensive but unsuccessful attempts to engage Avon in discussions regarding its proposal. Although the company added that it has no intention of pursuing an acquisition on a hostile basis.
“Our objective is to engage in discussions with Avon and conduct due diligence so that we and Avon can together determine if there is a basis for a transaction,” said Bart Becht, chairman of the board of directors of Coty. “We believe Avon’s shareholders would want their board to explore with us the benefits to shareholders of a transaction.”
According to Coty, the proposal, valued at approximately $10bn, represents a substantial premium of 27% over the three-month volume-weighted average price for Avon shares and Coty says it is confident that the financing needed to complete the transaction would be available.
However, Avon said that the offer – substantially the same as one made less than two weeks ago – did not reflect the value of Avon and its global beauty care franchise. According to Avon, Coty's indication of interest represents a multiple of only 1.1 times Avon's net revenue for the fiscal year ended 31 December 2011 and 8.7 times 2011 EBITDA. Avon's board added that it felt Coty's indication of interest was opportunistic and not in the best interest of shareholders.