Avon (AVP) Sends Coty Message in a Bottle: Do Better
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No "musking-up" is going on for Avon (NYSE: AVP) Monday morning following an unsolicited, non-binding $23.25 per share bid by Coty, Inc. The offer values the cosmetics giant at about $10 billion.
Coty said the price was a 27 premium over the trailing three-month trading average for Avon. The offer was a 20 percent premium to Avon's closing price of $19.36 last Friday.
At about 8am EDT, Avon issued its own release which acknowledged the offer and said the bid "was substantially the same as one made less than two weeks ago. At that time, the Board concluded, and it still believes, that Coty's indication of interest is opportunistic and not in the best interest of Avon's shareholders." Avon believes "Coty's indication of interest does not constitute a real offer: Coty's indication of interest is non-binding and, by its own terms, subject to numerous conditions such as financing, due diligence and the negotiation of a definitive agreement."
Over the last year, Avon traded as high as $31.60, but began slumping over the summer following its second-quarter earnings miss last July. Shares were further hit in October after a third-quarter miss. The one thing breathing some life into the stock was the announcement Executive Chairman Andrea Jung would step down from the CEO and Chairman roles. Since that announcement, shares moved about 19 percent.
With Avon shares typically trading in the $30 to $33 range, the company might be looking for something more to the tune of $28 to $30. Coty -- the marketer of such cologne brands as "Stetson," "Tim McGraw," "Faith Hill," "Jennifer Lopez," "Kate Moss," and a handful of other celebrity-named offerings -- is clearly trying to get a solid asset at a depressed price while it works to regain direction and leadership. This effort should be an interesting one to watch over the next several weeks.
Shares of Avon are up about 19.3 percent on the session, though the stock did trade for about 3 cents above Coty's bid at one point.
Coty said the price was a 27 premium over the trailing three-month trading average for Avon. The offer was a 20 percent premium to Avon's closing price of $19.36 last Friday.
At about 8am EDT, Avon issued its own release which acknowledged the offer and said the bid "was substantially the same as one made less than two weeks ago. At that time, the Board concluded, and it still believes, that Coty's indication of interest is opportunistic and not in the best interest of Avon's shareholders." Avon believes "Coty's indication of interest does not constitute a real offer: Coty's indication of interest is non-binding and, by its own terms, subject to numerous conditions such as financing, due diligence and the negotiation of a definitive agreement."
Over the last year, Avon traded as high as $31.60, but began slumping over the summer following its second-quarter earnings miss last July. Shares were further hit in October after a third-quarter miss. The one thing breathing some life into the stock was the announcement Executive Chairman Andrea Jung would step down from the CEO and Chairman roles. Since that announcement, shares moved about 19 percent.
With Avon shares typically trading in the $30 to $33 range, the company might be looking for something more to the tune of $28 to $30. Coty -- the marketer of such cologne brands as "Stetson," "Tim McGraw," "Faith Hill," "Jennifer Lopez," "Kate Moss," and a handful of other celebrity-named offerings -- is clearly trying to get a solid asset at a depressed price while it works to regain direction and leadership. This effort should be an interesting one to watch over the next several weeks.
Shares of Avon are up about 19.3 percent on the session, though the stock did trade for about 3 cents above Coty's bid at one point.
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