Avon’s calling foul after £6.2bn offer
STRUGGLING door- to- door cosmetics firm Avon has rejected a £ 6.2bn bid from Coty, the world’s largest fragrance maker.
The cash offer marks a swift return to the acquisition trail for Bart Becht, the former Reckitt Benckiser boss who stepped down last year after piecing together the Durex-to-nurofen giant through a series of deals.
Just five months ago Dutchman Becht took up the chairmanship of privately owned Coty, which makes fragrances by celebrities including Beyoncé and Lady Gaga.
He wrote to Andrea Jung, his counterpart at Avon, with the $23.35-a- share deal two weeks ago – one of a series of proposals which Coty says have fallen on deaf ears.
Becht decided to go public yesterday to ‘ inform Avon’s shareholders of the significant value in a transaction’ but added he has no intention of pursing an acquisition on a hostile basis.
He said: ‘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.’
Avon took about an hour to rebuff the approach, which came at a 27pc premium to its share price, rejecting the offer as ‘opportunistic’ and ‘not in the best interests of Avon’s shareholders’. It accused Becht of trying to lift its veil in order to obtain a ‘free look’ at what it had to offer.
Analysts said the timing of the deal was particularly opportunistic.
Avon’s smaller rival launched its approach three months after Jung said she would step aside in the wake of a bribery investigation and disappointing third quarter trading.
Shares in the firm fell 45pc last year after regulators probed its accounts, amid allegations of bribery related to its entry into emerging markets including China.
With 13 years under her belt as chief executive, Jung is the longest serving woman boss at a Fortune 500 firm.
Once a new chief executive is found she will be elevated the role of full- time executive chairman.
City analysts say the deal makes strategic sense because Coty is in developed countries while Avon has strength in emerging markets.
Coty, which makes fragrances for David and Victoria Beckham, Adidas and Playboy, also has a strong presence in nail accoutrements.
Avon is stronger in ‘skin’ products – such as moisturisers and anti-aging cream – and colour, which includes foundation, lipstick, and eye-shadow.