Door-to-door beauty products seller Avon has slammed the door on a $US10 billion ($A9.6 billion) takeover bid from Coty, saying the offer from the US cosmetics giant undervalues the "iconic consumer company".
Avon, which has 6.4 million independent representatives in over 100 countries and has more than $US11 billion in annual revenue, said the Coty bid was "significantly below" Avon's value.
Coty on Monday launched a cash offer of $US23.25 per share for Avon, noting negotiations on a merger had failed and it was putting the matter to shareholders of the struggling Avon.
Coty said in a statement it had decided to make its proposal public in order to inform Avon's shareholders of the significant value in a transaction but added that "it has no intention of pursuing an acquisition on a hostile basis".
Coty said its offer "represents a very substantial premium of 27 per cent over the three-month volume-weighted average price for Avon shares".
Coty said it had made "extensive but unsuccessful attempts to engage Avon in discussions".
Avon, a New York-based pioneer of direct selling founded in 1886, called Coty's offer "opportunistic and not in the best interest of Avon's shareholders".
Avon noted that Coty's offer was subject to numerous conditions.
"In the final analysis, Coty is attempting to obtain a 'free look' at Avon in the absence of any commitment whatsoever to close a transaction at any price," it said.
Avon, which claims to be the world's biggest direct seller, reaffirmed its commitment to finding a new chief executive and pursuing a strategy that develops Avon's "strong long-term prospects".
Bart Becht, chairman of Coty, a privately held New York-based firm founded in 1904 by Frenchman Francois Coty, stressed that it wanted to hold talks with Avon to "determine if there is a basis for a transaction".
"We believe Avon's shareholders would want their board to explore with us the benefits to shareholders of a transaction," Becht said.
Coty said in a letter to Avon chairman and chief executive Andrea Jung that it had made "compelling proposals ... that would provide full value to your shareholders".
"We were surprised and disappointed that Avon's board of directors has no interest in a discussion to explore our acquisition proposal."
Coty said it would consider raising the price of its proposal if Avon "can demonstrate that there is greater value than is apparent from publicly available information".
Coty privately approached Avon for the first time on March 7, then on March 19, with takeover offers.
Under pressure from shareholders, Avon is recruiting a new CEO to replace its long-standing chief, Jung. The company's share price has tumbled 36 per cent in a year and a half and its sales have steadily declined.
Coty has some $US4.5 billion in annual revenues and includes brands Calvin Klein, Chloe, Marc Jacobs, Davidoff, Philosophy, OPI, Playboy, Sally Hansen, Adidas and Rimmel.
Coty's fragrance portfolio ranges from Casmir perfume for Swiss luxury jewellery and watchmaker Chopard to hip-hop perfumes Baby Phat and Phat Farm.
Its proposal is for a merged firm to be called Avon Coty.
Coty noted Avon's strong presence in emerging markets, where it generates over 68 per cent of its revenues mainly in door-to-door distribution.
"While many of Coty's brands already have good levels of awareness in many of these markets, they are not widely available for sale at this point in time due to lack of Coty infrastructure," Coty said.