The fragrance company Coty, famous for brands such as Celine Dion, Jennifer Lopez and Adidas, offered to buy the direct sales beauty giant, Avon, for $10 billion, but Avon said no. This offer increased the Company's price per share to $23.25, a 20-percent increase over Avon's closing price on Friday ($19.36).
Avon is already in some hot water with a class action lawsuit filed against it for false and misleading representations relating to animal testing of its products, as well as allegations of possible bribery in China. Additionally, Kline reported the company's second-quarter 2011 revenue in North America was 7 percent lower year over year, active representatives declined by 8 percent, and units sold declined 16 percent compared with a year ago.
CNBC reported Coty has no intentions of making a hostile bid, but has yet to convince Avon to discuss the deal. Avon was reported saying the offer "substantially undervalues" the company. Its original offer in March—$22.25 per share—failed, and after three written attempts to get the direct sales company to talk, Coty went public with its offer.
"We do not understand how your Board's unwillingness to discuss our proposal can serve the best interests of Avon's shareholders," said Bart Becht, Coty Chairman, in letter to be delivered to Andrea Jung, Avon's CEO, on Monday. If Avon was willing to open its books, Coty said it may be willing to raise its offer.
In the meantime, Avon is on the hunt for a new CEO to replace Jung. The new CEO will assess the struggling company and possibly create "greater opportunity" for increased value, as reported by CNBC.
