By Phil Wahba
May 13 (Reuters) – Avon Products Inc on Sunday said
it told Coty Inc that it would consider the smaller
company’s $10.7 billion takeover bid and it expected to respond
within a week.
In a letter to Avon’s board dated May 9, Coty said it was
raising its offer from an earlier $10 billion bid and gave Avon
a deadline of the close of business on Monday, May 14, to enter
into talks or it would withdraw its offer.
In the letter, disclosed by Avon on Thursday, Coty raised
its bid for Avon to $24.75 per share from $23.25, and revealed
for the first time that Warren Buffett’s Berkshire Hathaway
would provide financing.
Coty, maker of Stetson aftershave and Beyonc (c) fragrances, in
April made its intentions toward Avon public for the first time
at $23.25 per share. Avon is nearly three times Coty’s size in
revenue. Coty’s initial bid in March was $22.25 per share.
Avon had rejected all prior offers from Coty, saying the
company’s value could rise under a new CEO rather than as part
of Coty.
Avon’s board did not reject the May 9 offer outright and
said it would consider Coty’s latest bid “in due course.” A
number of shareholders have previously told Reuters that Coty’s
bid was insufficient but wanted Avon to at least talk with Coty.
Avon, the world’s largest direct seller of cosmetics, last
month named former Johnson & Johnson executive Sheri McCoy as
its new CEO. In addition to declining sales at home and a loss
of sales representatives, Avon faces a U.S. probe into overseas
bribery allegations.
Last week, Avon reported weak first-quarter results,
including a sharp drop in profits. Avon has said it will conduct
a thorough business review this year.
Avon shares on Friday closed at $20.19, or 18 percent less
Coty’s latest offer.
