Coty is Done Bargaining, Closes Door on Avon Deal
It was revealed on Tuesday that Coty dropped its $10.7 billion takeover bid for Avon (NYSE: AVP) after months of dallying and indecision from the door-to-door cosmetics giant.
It shouldn't be a surprise, as Coty had put a firm date on a deadline for Avon to come back with an answer. That deadline was Monday, and it passed by without word. Coty has simply done what it said it would do and proven itself to be as good as its word.
Following the news of the dead deal, Avon shares dropped a full 14% in Tuesday premarket trading. If the prices hold, Avon will be worth less that it was priced at when Coty made its original bid in April. AVP fell $2.91 to $18.05.
You do have to wonder who is making the decisions at Avon, but the blame (if there is any) has to be placed at the feet of new CEO Sherilyn McCoy. Under her, the company's profit for the first quarter fell an staggering 82%.
Maybe she has some misguided faith that those numbers will see a rapid reversal, but most think that XCoty's offer was not only reasonable but generous, and that Avon should have snapped their hand off.
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