Coty says it is withdrawing offer to buy Avon

AP News
Posted: May 14, 2012 11:12 PM
Coty says it is withdrawing offer to buy Avon

Coty Inc. has slammed the door on Avon.

Privately held Coty said late Monday that struggling direct cosmetics seller Avon Products Inc. took too long to respond a its $10.7 billion buyout offer. It said it is withdrawing the offer, first made two months ago.

"Two months is enough," Coty Chairman Bart Becht said in a letter to Avon's board. "Consequently, as our deadline to begin discussions expired today, our proposal is withdrawn."

Last week, Coty raised the price of its original offer about 6.5 percent to $24.75 per share, or almost $10.7 billion. It demanded a response by Monday and said it would withdraw its offer otherwise.

On Sunday, Avon executives said they would consider the offer but asked for a week to weigh it. In his letter, Becht said Avon was given ample time and was not seriously considering the deal.

"It is time for Coty Inc. to move on and pursue other opportunities," he said.

New York-based Avon was founded in 1886 and made its "Avon ladies" selling products door to door and to friends and family a household name.

But it has fallen on hard times, with its North American sales suffering a long decline. About 80 percent of revenue at Avon, whose brands include Skin-So-Soft, Anew and mark, comes from overseas.

It has been under pressure from a bribery scandal, possible credit rating downgrades, pinched profits and other problems. Sherilyn McCoy, a longtime Johnson & Johnson executive, became CEO just days after Coty made its initial offer and has the task of turning Avon around.

Coty had argued Avon's best hope for a revival would be to sell itself.

Coty was founded in Paris in 1904 by Francois Coty, who is considered a pioneer in the fragrance industry. It is now controlled by German holding company Joh. A. Benckiser GmbH, which also operates consumer products company Reckitt Benckiser Group PLC. It is mainly known in the U.S. for its fragrances sold under the names of celebrities including Beyonce, Lady Gaga and Celine Dion. Its top-selling fragrance brand is Calvin Klein.