Briefly it looked as if Avon, the biggest direct seller of cosmetics in the world, would be taken over by its smaller competitor Coty. Only last week, the latter had substantially increased its bid, but as Avon missed Coty's deadline of 14 May, Coty withdraws its bid.
Takeover plans supported by Warren Buffett
Coty revealed its takeover intention in March, when it offered 22,25 dollar per share. In April, Coty even added another euro per share, but Avon rejected all bids on the grounds that the firm’s value would be more likely to increase with a new CEO than through the takeover.
In a letter dated on the 9th of May, Coty announced that it increased its previous bid of 10 billion dollar to 10,7 billion dollar. Coty Inc added that the deadline for the deal was Monday the 14th of May and that Warren Buffett’s Berkshire Hathaway was responsible for the funding.
Misplaced pride or better off alone?
This time, Avon’s board of directors announced that it was considering the takeover bid and that a final reaction would follow during the week. Reuters had heard that Coty’s bid was not satisfactory, but that Avon was willing to talk. Still, they missed this chance as well, as they chose to ignore Coty's deadline.
Shareholders are now anxiously waiting to see whether Avon will be able to turn the tide on its own. Last month the company has appointed Sheri McCoy as the new CEO, but her first announcement last week was one of weak first quarter results with a strong profit fall. Worse still, Avon might be fined heavily because of allegations of bribery abroad. The company has indicated that it will execute a thorough company audit this year.