Avon, Textron: S&P Gainers
The S&P 500 rose 10.43 points, or 0.74%, to 1,418.90.
Shares of Avon rose 17.25% Monday to $22.70. Beauty firm Coty put in a non-binding bid to purchase Avon for about $10 billion, or $23.25 a share. The offer is a 27% premium over the three-month, volume-weighted average price of Avon, Coty said. Avon rejected the bid.
"Coty's indication of interest is non-binding and, by its own terms, subject to numerous conditions such as financing, due diligence and the negotiation of a definitive agreement," Avon said in a statement. "Coty's letter to Avon dated March 30 alludes to the possibility that, following diligence, Coty reserves the right to raise or lower its price to acquire Avon. 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."
The stock gapped up Monday morning to $23.16 from its closing price Friday of $19.36.
Avon shares trade at an estimated price-to-earnings ratio for next year of 13.45X; the average for personal products companies is 15.87X. For comparison, Kimberly-Clark(KMB) and Colgate-Palmolive(CL) both have higher forward P/Es of 13.56X and 16.69X.
Twelve of the 16 analysts who cover Avon rate it at hold; four analysts give the stock a buy rating.