U.S beauty products firm Avon Products Inc. said Monday it had turned down a $23.25 per share bid from Coty Inc., saying it undervalued the company.
Avon said the offer was "only a 20 percent premium over the company's closing share price on March 30, 2012," whereas Coty announced its offer was "valued at $10 billion," which, the firm said, "represents a very substantial premium of 27 percent over the three-month volume weighted average price for Avon shares."
Avon, the firm that boasts a sales staff of 6.4 million, said Coty did not make a "real offer." It was subject to so many conditions that the strategy, Avon said, was, in effect, "to obtain a 'free look' at Avon in the absence of any commitment whatsoever to close a transaction at any price."
In contrast, while Coty said it was not interested in a hostile takeover, it published a letter sent to Avon's Chairman and Chief Executive Officer Andea Jung.
"We are confident your shareholders would want the board to at least explore with us the possibility of such a compelling transaction," the letter said.