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Coty Pulls Avon Offer

Posted: May 21, 2012

Through the following letter, Coty announced that it has revoked its offer to acquire Avon Products, Inc.

May 14, 2012

Board of Directors
Avon Products, Inc.
1345 Avenue of the Americas
New York, NY 10105

Dear Members of the Board:
Since we first reached out to Avon Products, Inc. at the beginning of March with our acquisition proposal, it has been our sincere hope that we would be able to explore together a friendly combination of our two companies that would provide premium value to Avon's stockholders and benefit its customers, representatives and associates around the world.

While we have waited patiently, Avon's Board has now had more than two months to consider whether to engage in discussions and permit us to conduct due diligence. We have not asked the Board to accept our proposed purchase price or to agree to sell the Company, but only to sit down and discuss whether there might be a common basis for pursuing a transaction that we believe would be beneficial to all parties.

Last week, we offered Avon's Board an increase in the value of our proposal, additional detail on the key areas of focus for our diligence, a willingness to sign a standstill agreement and one last opportunity to engage in discussions. We believe that we provided the Board with ample time to respond, particularly since it has already had months to consider our initial request. Yesterday, we received a two sentence email indicating, without explanation, that Avon's Board would need another week to consider our request. Since receiving your email, we have reached out to Avon's Board, management and advisors to understand why additional time is needed, but we have received no explanation. I find it remarkable that since we made our revised proposal, and despite repeated requests over the last 24 hours, no one from Avon's Board or management has been willing to speak with us, including Fred Hassan, Andrea Jung and Sheri McCoy.

This continued delay and unwillingness to engage in discussions is disappointing and certainly not a constructive way to proceed. We believe that we provided a compelling and well-financed proposal for a business facing multiple challenges. As you know, our proposal included equity commitments in excess of $5.8 billion from Joh. A. Benckiser, BDT Capital Partners and certain of its limited partners, and Berkshire Hathaway Inc. Debt financing was to be provided by JPMorgan Securities.

We received encouragement from many of your shareholders, research analysts and others in the financial community. Despite this support, your total lack of engagement with us leads us to believe that you remain reluctant to explore a friendly, negotiated combination on a reasonable timetable. Two months is enough. Consequently, as our deadline to begin discussions expired today, our proposal is withdrawn. It is time for Coty Inc. to move on and pursue other opportunities.

While we are disappointed, we wish you success in pursuing your standalone turnaround strategy.
With best regards,
Bart Becht

In a released statement response, Avon commented that the company “responded promptly to Coty's May 9th letter by disclosing it on May 10th and indicating that its board would consider the contents of the letter. Subsequently on May 13th, Avon's board said it would respond to Coty's letter within one week after considering it in conjunction with management and financial and legal advisors.”

Moving ahead, Coty now appears to be investigating an IPO offering.