Coty Inc. is giving Avon Products Inc. one last chance to consider its takeover proposal — and it’s lined up none other than Warren Buffett to help it out.
After spending the last month working to win over Avon shareholders, Coty is once again lobbying Avon’s board. This time around, Coty has sweetened the offer with a higher bid of $24.75 a share, or $10.65 billion — and a new investor, Buffett’s Berkshire Hathaway Inc. Buffett’s company also has an investment in Johnson & Johnson, ironically the former employer of Avon’s new chief executive officer, Sheri McCoy.
Avon made Coty’s letter, which was dated May 9, public on Thursday, and did not immediately reject the offer, as it did on April 2 following Coty’s initial bid of $23.25 a share, or $10 billion. Instead, Avon said its board “will consider the letter in due course.”
Despite Coty’s lingering interest, Avon’s shares closed down 3.3 percent Thursday at $20.89 on the New York Stock Exchange.
Bart Becht, chairman of Coty Inc., made clear that his company’s offer has an expiration date. Avon has until Monday to respond, or Coty will withdraw the new offer, which is subject to an expedited due diligence process of several weeks.
Becht wrote, “When we contacted you again last week, you advised us that Avon’s board of directors was not prepared to engage in any discussions regarding any revised proposal until Avon had completed a strategic and operational internal review with its new ceo.
While we understand Avon’s interest in conducting such a review given the significant challenges and uncertainties described in your recent analyst call, this review can and should be done in parallel with exploring the strategic alternative of selling the company....We will not keep our proposal open for the several months that you say you need to conduct your internal review.”
Coty stated its equity sources are prepared to work until May 31 to find a mutually agreeable basis for a transaction. The company reiterated that its equity financing sources would include its principal shareholders Joh. A. Benckiser, BDT Capital Partners and certain of its limited partners, as well as the addition of Berkshire Hathaway. Berkshire Hathaway did not return calls requesting comment.
“We believe the revised offer is a fair starting point to negotiations and increases the likelihood Avon is acquired,” Stifel Nicolaus analyst Mark Astrachan wrote in a research note on Thursday. “Absent an agreement, Avon’s board must present a compelling argument to shareholders why the company should remain independent, particularly given numerous fundamental and operational problems and highlighted by disappointing first-quarter results.” Should Coty walk, Astrachan said shares will likely return to high-teen levels.
Coty may not be Avon’s only suitor. The Dallas-based private equity firm Richmont Holdings is reportedly putting together an offer as well. The family-run fund is lead by John Rochon, a former chairman and ceo of Mary Kay Inc. But a number of financial observers questioned Richmont’s ability to gather the funds needed to outdo Coty’s initial $10 billion bid. A spokesman for Richmont stated, “I can’t confirm or deny the reports that have surfaced regarding Richmont and Avon.”
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews