(Reuters) - Shares of Avon Products Inc (AVP.N) 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 (BRKb.N) (BRKa.N) 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 Chief Executive 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.
Reporting by Ranjita Ganesan; Editing by Viraj Nair