The rejected acquisition heard round the financial world on Monday, between Coty and Avon, caused quite the buzz. Coty tried to keep its proposal private, originally making Avon an offer in early March; but after three unrequited written attempts to Avon's CEO Andrea Jung, the company decided to take its offer public. Avon is keeping tight reigns on its books, distrusting of Coty; while Coty is stating it's not looking to go hostile and is more than willing to reevaluate its $10 billion offer if Avon would give the company some warranting proof.
Why Avon? According to Coty, Avon's direct sales, door-to-door model would help the company's beauty brands, allowing the company to depend less on its fragrance segment—accounting for 57 percent of its yearly sales ($4.1 billion) ended in June 2011.
So who is Coty? Coty was started in 1904 in Paris. Its founder, Francois Coty wanted to "reinvent the perfumer's fragrance palette." I think it's safe to say Coty reinvented the fragrance wheel, as it is one of the largest fragrance sellers in the world with numerous celebrity-branded scents under its umbrella. Moreover, in 2005, Coty paid, in cash, $800 million for Unilever's fragrance business, which came with big names such as Vera Wang. With fragrance mastered, the company's CEO, Bernd Beetz, wanted to diversify its portfolio, focusing on three beauty segments: fragrance, color cosmetics and skin care.
Once again, Coty set out accomplish something, and it did. In November 2010, Coty bought German-based Dr. Scheller Cosmetics, skin-care company Philosophy and nail-polish maker OPI Products Inc.; and by Christmas time the company acquired T JOY, a Chinese skin-care company. Mission accomplished, eh? As the title implies, Coty is a bit of a silent giant. We'll see if they also gain a foothold in the door-to-door cosmetic sales segment, too.
