Avon receives letter from Coty chairman Bert Brecht
11 May 2012
Avon Products, Inc.received a letter from Coty Inc., dated 9 May 2012, which is attached below. Avon's board of directors will consider the letter in due course.
Avon, the company for women, is a leading global beauty company, with over $11 billion in annual revenue. As the world's largest direct seller, Avon markets to women in more than 100 countries through approximately 6.4 million active independent Avon Sales Representatives. its product line includes beauty products, as well as fashion and home products, and features such well-recognized brand names as Avon Color, ANEW, Skin-So-Soft, Advance Techniques, Avon Naturals, andmark.
In a letter to Avon's board, expressing his disappointment at the stalemate over Avon's refusal to the merger proposal, Coty chairman Bart Becht said that his company has received equity financing for the deal from its main shareholder, Joh A Benckiser, BOT Capital Partners and some of its limited partners, and Warren Buffett's Berkshire Hathaway, while JPMorgan Securities would provide debt financing (See: Coty gains Warren Buffet's backing to acquire Avon, raises bid).
The text of the letter is reproduced below:
Board of Directors of Avon Products, Inc.
1345 A venue of the Americas
New York, NY 10105
Dear Members of the Board,
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 analysing 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.
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.
We have been disappointed by the current stalemate. As you know, we contacted Avon last week in an effort to break this deadlock. We indicated that we were prepared to engage in non-public discussions and discuss an increase to our proposal of $23.25 if substantiated through a three-week diligence process.