Instead of trying to make up, privately held cosmetic’s maker Coty has instead decided to drop their attempt to take over Avon (NYSE:AVP).
Coty raised their initial offer of $23.50 to $24.75 per share late last week, giving Avon’s board the weekend and Monday to either accept or reject the $10.7 billion offer. According to AP reports, Avon asked for more time to mull over the offer, however Coty rejected the request, and the offer was rescinded effective Monday afternoon.
Shareholders and the market reacted almost immediately by selling down positions in the troubled company, with the stock gapping down nearly 10% in early Tuesday trading, hovering near $18 per share, well below the company’s 52-week high of $30, and under Coty’s original $10 billion offer made in April.
Avon has had a very rough time of it, with profits shrinking year over year for the last three year periods, and first quarter 2012 results were terrible, with profit shrinking 82% on a quarter-on-quarter basis. The company is also involved in a bribery scandal, as regulators look into the company’s dealings with Wall Street financial analysts.
Avon also recently replaced their previous CEO in favor of the recently hire Sherilyn McCoy, who now more than ever has her work cut out for her trying to remake Avon’s beauty.
Written by Marc Bastow, Assistant Editor at InvestorPlace.com. As of this writing Mr. Bastow does not hold a position in any of the aforementioned securities.