What a waste of time. Stock prices moved. Letters were exchanged. Boards met. Lawyers, analysts and journalists were kept busy. And in the end, Coty’s limp bid for the flailing cosmetics seller Avonended with a pouty letter. “Yesterday, we received a two sentence email indicating, without explanation, that Avon’s board would need another week to consider our request,” Coty complains. “We have received no explanation ... no one from Avon’s board or management has been willing to speak with us ... our proposal is withdrawn.” Boo hoo.
At least all the pointless activity raises an interesting question: which company made itself look worse? It is a close contest. Avon may seem the obvious choice. Investigations into bribe-paying abroad and inappropriate contact with analysts at home are the garish lipstick on the pig of the company’s falling profitability. In the two years before Coty’s offer became public, Avon’s shares trailed the wider market by 65 per cent. One would think that the offer represented a chance to give shareholders some relief, and the deal made sense on its face. That is over now. Avon’s shares are beneath the pre-offer price.
Coty, for its part, never secured committed financing, never made a firm offer and never showed any willingness to go hostile, even if pushed. Yes, Avon’s operational struggles and legal issues make it a hard company to value, unless Avon was willing to allow non-public information to be scrutinised. But every bid involves risk. And if Coty was unwilling to make a strong offer, then it should have expected a slow process. What would it have cost to give Avon the extra week?