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Shares of () jumped by as much as 20% in Thursday on rumors of a takeover.
Avon was trading at US$8/share for a period of 20 minutes then stabilizing to about US$6.9/share or about 4% higher in response to news that the cosmetics group had received an offer worth three times its market value from PTG Capital Partners.
Avon said it had not received an offer and could not confirm the existence of the alleged buyer who was said to have filed an official offer of US$18.75/share with the Securities and Exchange Commission (SEC).
Such an offer suggests Avon is worth US$8.15 billion even while at close of markets on Wednesday the company was worth US$2.9 billion.
Calls to phone numbers cited in documents filed by PTG failed to get a response creating a buzz and a mystery around the offer that only grew as the offer from PTG also included paragraphs from private equity fund TPG Capital’s website.
PTG’s listed address is also similar to that of TPG in Fort Worth (Texas).
The document which has multiple misspellings also identifies the author as TPG itself in certain sections replacing the initial enthusiasm with much doubt about the authenticity of the offer.
The offer even if it proves to be valid is all the more mysterious considering that Avon’s shares have lost more than 40% of their value since the start of 2015.
Avon posted a sharp sales drop in 2014 and 7.2% lower adjusted earnings.
The New York City based company attributed the decline on a shrinking independent sales force.
In 2012 Avon launched a US$400 million savings program to improve competitiveness which may relegate its famous door to door sales catchphrase "Ding Dong Avon’s calling" back to the era of ‘Mad Men’ according to the Wall Street Journal.
Indeed the struggling direct-selling company looks at so-called "strategic alternatives" that include the 129-year-old New York company possibly selling its business in its home market.
An Avon spokeswoman declined to comment on the report which came one day after Avon announced it is postponing from May to the fall an analyst day with Wall Street experts during which it was to have laid out its latest turnaround plan.
Once the largest direct-selling company in the world Avon has flailed in recent years particularly in North America. In 2014 Avon’s North America revenue fell 18% to $1.2 billion crumbling to barely half of what it took in 2007.
And more worryingly for a company that depends entirely on sales reps the number of Avon Ladies selling its products fell 18% at home. Globally the size of its sales force fell for the fifth straight year.
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