Coty Increases Bid for Avon

Coty Inc. has made a new nearly $10.7 billion bid for Avon in a deal that involves Berkshire Hathaway Inc.

Coty raised its price per share 6.5% to $24.75 and also put forth a Monday, May 14 deadline for Avon’s board to respond—or it will pull out of the deal.

Coty’s equity financing sources in this latest deal include its principal shareholder Joh. A. Benckiser, BDT Capital Partners and certain of its limited partners, and Berkshire Hathaway Inc.

Avon Products, Inc. said it had received a letter from Coty Inc., and its board would “consider the letter in due course.”

Avon published Coty’s letter on its website.

In the letter, Coty chairman Bart Becht stated, “Since we made public our non-binding proposal to acquire Avon for cash (the "proposal") more than a month ago, we have spent significant time listening to your shareholders and analyzing public information, including your most recent quarterly results. We continue to believe that our proposal would provide compelling value to Avon's shareholders relative to a difficult and uncertain multi-year turnaround on a stand-alone basis.”

He continued, “The combination of Avon and Coty would create a global beauty company with broader innovation, branding and execution capabilities to benefit its customers, representatives and associates around the world.”

Further, Becht stated,“We remain keenly focused on understanding Avon's operational and financial challenges, evidenced by your disappointing first quarter results and outlook, as well as your recent credit ratings downgrades. We need to confirm our synergy estimates, the availability of which will be critical to our final valuation and the reinvestment required to implement a turnaround of Avon. In particular, we are very interested in understanding the components of your SG&A expense line item as we evaluate how to increase economic opportunities for your representatives relative to controlling overall corporate spending. We also need to better understand your ongoing Foreign Corrupt Practices Act investigation and litigation, and what it will cost to address operational and financial problems and these liabilities.”