Avon Rejects Coty's Buyout Offer As Too Low
DAVID GREENE, HOST:
Now, to news of a failed cosmetic takeover.
Avon, the global cosmetics company known for its door-to-door sales, has rejected a $10 billion takeover bid from Coty. That company is best known for things like its Lady Gaga and Calvin Klein fragrances.
NPR's Wendy Kaufman reports that Avon believed the offer was just too low.
WENDY KAUFMAN, BYLINE: Avon has been around since the late 1880s. The company offered many American women a way to earn their own money decades before they earned the right to vote. And by the early 1960s, the company's ads had become iconic.
(SOUNDBITE OF AVON AD)
UNIDENTIFIED ANNOUNCER: Collect your favorite colors from a rainbow range of shades. Your Avon representative will be calling soon to show you Avon's new Lipstick Deluxe and other makeup news.
KAUFMAN: Avon has annual revenue of more than $11 billion. But R.J. Hottovy, an analyst at Morningstar, says the company also has problems.
RJ HOTTOVY: Avon's been a much-beleaguered company the past 18 months - struggling in some of its markets; some management issues, including turnover; and just a lack of fundamentals.
KAUFMAN: And Hottovy says Coty saw an opportunity as it tries to expand globally.
HOTTOVY: Avon does participate in several emerging markets including Brazil, China and Russia.
KAUFMAN: He suggests Coty wanted to leverage Avon's name, and its fleet of direct sales representatives, to accelerate international growth. But merging the two companies with their very different retail approaches would have been difficult, even if they could have agreed on price.
Wendy Kaufman, NPR News.
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