Coty ups Avon bid once again, Avon execs mulling it

By Simon Pitman

- Last updated on GMT

Related tags Coty

Avon has confirmed that it has received another improved acquisition offer from Coty, which the direct sales player says it is currently considering.

Last month Coty made a bid for the Avon which valued it at just over $10bn, a price tag Avon executives rejected on the basis that it significantly undervalued the company which currently has an $11bn turnover.

The latest offer from Coty has upped its offer from $23.25 per share to $24.75 per share, a bid that would value the company at approximately $10.7bn. This is now the third bid Coty has made, having initially bid $22.25 a share back in March.

Coty frees up cash to ready an improved offer

A controlling stake holder in Coty made the move to liquidate shares in an effort to free up further cash at the start of this week, leading financial experts to believe that a new offer was in the pipeline.

Coty has also revealed that it has lined up investment company Berkshire Hathaway as its potential investment partner, a name that is said to consistently lend impetus to big merger and acquisition deals.

But the bidding may be hotting up as investment group Richmont Holdings is also said to be lining up the finance in order to make a bid for Avon.

Coty wants to move quickly

Coty's offer comes after a period of stalemate following the initial offer, which was given a flat ‘no’ by Avon executives. The fact that the company now says it is giving the current offer more thought has analyst and industry experts believing that it is coming round to the idea of a sale.

In the letter, which was published on the Avon corporate website today, Coty stated that it has been wanting to re-negotiate its initial offer in an effort to move the bidding process forward. This is an extract from the letter:

“We have been disappointed by the current stalemate. As you know, we contacted Avon last week in an effort to break this deadlock. We indicated that we were prepared to engage in non-public discussions and discuss an increase to our proposal of $23.25 if substantiated through a three-week diligence process.”

Coty sets the deadline for a decision

Expressing its frustration at the long-winded decision-making process at Avon, Coty has said that it is working on a deadline of May 31st​ to get a firm answer from the company, instead of the ‘several months’ Avon says it needs to come to a decision.  

Coty also says it wants a decisive response on whether or not Avon is going to seriously consider the offer by Monday, May 14th​. Likewise, Coty’s offer will also have to be firmed up after due diligence, which could also affect the final price.

“Our revised proposal is subject to customary conditions, including, among other things, our satisfaction with the results of due diligence in our sole discretion, the negotiation of a mutually satisfactory definitive agreement, financing and the approval of the negotiated terms of a transaction by our Board of Directors,”​ Coty’s offer letter also states.

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