Spotlight on Avon’s McCoy at CAGNY conference

NEW YORK, Mon, Feb. 18, 2013 — Investors bought everything Avon Products Inc. CEO Sheri McCoy was selling last week, lifting shares 23 percent on the back of solid results and a confidence the new CEO has a turnaround plan.

That makes the spotlight even brighter on McCoy when she takes center stage on Thursday at an important industry analyst conference and details that turnaround. Among her biggest challenges: fix the company’s technology problems, and help the sales representatives generate more cash.

“She has to start speaking with specificity,” said Kathy Gersch, a co-founder of Kotter International, which helps companies implement strategies and whose clients include Coty Inc., a smaller rival that tried to buy Avon last year.

“It’s not just about fixing the company anymore. It’s about moving the company into the future.”

So far, McCoy and finance chief Kimberly Ross, have taken early steps to cut costs, stanch an exodus of representatives in top markets like Brazil and Russia, and start talks with U.S. officials to settle a costly overseas bribery probe.

Wall Street gives McCoy and Ross kudos for being frank about the depth of Avon’s problems and for taking tough steps like cutting 1,500 jobs in December as part of plan to save $400 million in costs a year by 2015; and exiting Vietnam and South Korea where it is too far behind rivals.

The quarterly performance turned in on Tuesday showed some of that progress, cheering investors who had become disappointed by the broken promises in the later years of the tenure of Andrea Jung, McCoy’s predecessor.

Avon shares slide after Coty withdraws takeover offer

NEW YORK, Tue May 15, 2012 – Shares of Avon Products Inc. fell 14 percent in premarket trading on Tuesday, after Coty Inc. withdrew its $10.7 billion takeover bid for the world’s largest cosmetics direct seller, saying Avon had missed its deadline to begin discussions.

Fragrance company Coty last week raised its unsolicited bid, which had the financial backing of Warren Buffett’s Berkshire Hathaway and others, to $24.75 per share from an earlier $23.25 per share offer, and gave Avon a Monday deadline to respond.

Avon’s stock fell to $17.95 before the bell on Tuesday, below where it was trading before Coty’s initial $10 billion bid was made public in April.

“While Coty’s bid provided a floor under Avon’s stock, the withdrawal of this bid will push it to its fundamental level,” BMO Capital Markets analyst Connie Maneaty wrote in a note.

Avon, which had rejected all of Coty’s earlier bids without entering into discussions, said on Sunday that it would respond to Coty’s latest offer within a week. However, Coty withdrew its proposal on May 14, five days after raising its bid.

“Shareholders may be disappointed to see Coty walk away, rather than pushing for a transaction,” Victoria Collin of Atlantic Equities LLP wrote in a client report.

The news leaves Avon shareholders hoping new CEO Sheri McCoy can spark a turnaround at the company that has been struggling with plummeting profits on falling sales both at home and in some international markets.

“Ultimately the value at Avon that can be unlocked, if correctly executed, should be worth over $25/share,” Collin said.

Avon rejects $10 billion takeover bid from beauty company Coty

NEW YORK, Mon Apr 2, 2012 – Beauty company Coty Inc. said on Monday it offered to buy Avon Products Inc. for $10 billion, but the bid was rejected by the cosmetics direct seller, which is grappling with sliding sales in key markets and a bribery probe.

Coty, whose products include fragrances for celebrities including Beyonce and Lady Gaga, said it had no plans to make a hostile bid but had been “unsuccessful” in getting Avon to talk about a deal.

Coty, a fast growing privately held company majority-owned by John A. Benckiser, is offering $23.25 per share, a 20 percent premium over Avon’s Friday closing price of $19.36 on the New York Stock Exchange.

Shares of Avon rose 19.3 percent to $23.10 in premarket trading.

Avon, in a statement on Monday, rejected the offer, saying it “substantially undervalues” the company.

Avon is searching for a new CEO to replace Andrea Jung, who has held the reins since 1999. Avon has said the new CEO will undertake a top-to-bottom review of the struggling company, which is also dealing with a probe into whether it broke U.S. anti-bribery laws in China.

Avon said that having a new CEO will create a “greater opportunity” to increase the company’s value beyond what Coty is offering.

The company is facing a long decline in sales and the number of sales representatives in the United States. During the holiday period, sales in key emerging markets like Brazil and Russia fell.

Coty said it originally offered $22.25 per share in early March but failed to entice Avon into talks. It said it went public with its latest offer after sending three letters to Jung but failing to draw Avon into discussions.

“We do not understand how your Board’s unwillingness to discuss our proposal can serve the best interests of Avon’s shareholders,” Coty Chairman Bart Becht said in letter to be delivered to Jung on Monday.