Coty Inc. said Monday it has withdrawn its $10.7-billion takeover bid for Avon Products, Inc.
In a letter to Avon’s board, which was made public, Coty chairman Bart Becht said his company is withdrawing its offer and moving on to pursue “other opportunities.”
Coty made its first approach to Avon in March and raised its bid last week. Shares of Avon overcame a down market on Monday and grew 3.8 percent to close at $20.96, but that’s still well below Coty’s tentative offer of $24.75 a share, which amounts to $10.65 billion.
“We received encouragement from many of your shareholders, research analysts and others in the financial community. Despite this support, your total lack of engagement with us leads us to believe that you remain reluctant to explore a friendly, negotiated combination on a reasonable timetable. Two months is enough. Consequently, as our deadline to begin discussions expired today, our proposal is withdrawn,” Becht wrote.
In his letter, the executive expressed his frustration with what he characterized as a lack of communication from Avon.
“While we have waited patiently, Avon’s Board has now had more than two months to consider whether to engage in discussions and permit us to conduct due diligence. We have not asked the Board to accept our proposed purchase price or to agree to sell the Company, but only to sit down and discuss whether there might be a common basis for pursuing a transaction that we believe would be beneficial to all parties,” he said.
Early Tuesday morning, Avon issued a response to the Coty statement stating that it “responded promptly” to Coty’s May 9th letter by disclosing it the following day and indicating that the the board would consider the contents of the letter. Avon made a second statement on Sunday, explaining that it planned to respond to Coty’s letter within one week.
In his letter, Becht said Avon has given no explanation for why it needs extra time to consider Coty’s request. He said he finds it “remarkable” that no one from Avon’s board or management has been willing to speak with Coty.