An interesting M&A deal…. Will it happen or not though?
Coty said on Monday that it has offered to acquire Avon Products for about $10 billion in cash, a deal that would combine two giants in the beauty business.
Questions:
1. Is a premium of 20% good? Can they do better?
2. Do you think this deal will/should go through? Paying in cash only… seems a bit ‘wild’?
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The CEO of AVON is retarded. They should have taken the bid.
It is the board, not the CEO. Anyway, there are reports coming out that the board thinks the proposal was heavily undervalued even though Coty claims to have already secured financing.
I think Avon has been in the dumpster for a while now. From having weird accounting differences in net income and cash flow to their long-time CEO leaving, I think they should have taken the bid in an attempt to restructure the company.
What is interesting is that (for now) Coty says they will not pursue a hostile takeover... I think they will definitely go hostile if management continues to ignore them. I doubt there are many shareholders that want to hold on to their shares for much longer (especially after all they have been through).
Highly likely Avon is holding out for a better offer. I predict they up the bid a bit, give the Avon directors a few spots, adn sweeten the deal other ways. It's also important to note Avon traded near 30 just about a year ago. The current offer is for 23.25.
The offer was waaaaaaay too low. Way...way...way too low.
Avon just axed its CEO for FCPA violations. Jung is like interim CEO. Seems like an opportunistic bid to try and pick up a solid company going through enough trouble to have its share prices depressed.
Coty probably knows it's going to have to up its bid, which is why this was a lowball offer. If Coty can lock up the financing and really put the screws to Avon, it'll probably get the company, albeit likely only at a higher price.
Sorry I confused the FCPA stuff with the fact that they're trying to oust Jung: http://www.forbes.com/sites/jennagoudreau/2011/12/14/avon-longtime-ceo-…
They're on the look for a new CEO. This is probably also adding to the volatility around the stock. My bad on the mix-up though -- thanks for keeping me honest WSO ;)
Despite my personal feelings towards Andrea Jung, I was a little surprised at this. Anyone who has a minute should go back and check out the earnings transcript from, I believe, 2 quarters ago? Maybe someone else remembers, but it was hilarious during the Q&A the way the analysts were ripping apart Andrea's comments from earlier and the disappointing quarter. Anyone remember this? One of the analysts who made a comment was a friend, and I'm pretty sure I spit up whatever I was eating after I heard the way they worded the question.
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