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Avon shares plunge after Coty walks away from $10.7 billion takeover bid for troubled company
NEW YORK (AP) ' Avon shares plunged 14 percent in premarket trading Tuesday after Coty dropped its $10.7 billion takeover bid for the cosmetics company.
Coty Inc., a privately held rival, had raised its original offer last week by about 6.5 percent, but set a deadline of Monday for the company to accept the bid.
Avon asked for more time to consider the bid over the weekend, but it appears that Coty would have not of it. It slammed that door shut on the troubled company Monday and investors are following suite even before the markets open Tuesday in some heavy trading.
If the current prices hold, Avon shares will be worth less than when Coty made its original offer back in April. Shares fell $3.06 to $17.90.
The big question now is what comes next for Avon?
The company is embroiled in a bribery scandal that led to the ouster of its vice chairman in January. The investigation, which initially involved executives in Asia, has spread and late last year federal regulators began looking into the New York company's dealings with financial analysts.
Earlier this month, under the leadership of recently arrived CEO, Sherilyn McCoy, Avon reported that its first-quarter profit tumbled 82 percent, even worse that Wall Street had feared.
That has become the norm. Profits have been shrinking for three years and Avon is suffering even in places it had seen as strongholds.
Avon Products Inc. holds its shareholders meeting in two weeks.