Avon's American curse

13 October 2010 By Christopher Swann

Takeover talk has lifted shares of the doortodoor cosmetics firm. Strong demand in emerging markets may make Avon a tempting target for L Oreal or others. But the Avon ladies in Brazil and China come with American sisters whose business model might turn off erstwhile suitors.

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Avon Products shares rose on October 12 after the Daily Mail newspaper said French cosmetics maker L'Oreal may be lining up a cash bid for the company.

Citing market rumors, Britain's Daily Mail said L'Oreal was getting ready to make a cash offer of more than $44 a share for the U.S. door to door seller of cosmetics and perfumes, or at least $18.8 billion.

Avon shares were up 2.5 percent, at $33.99 in afternoon trading after surging as high as $36.20 earlier in the day.

Representatives for both Avon and L'Oreal declined to comment.

An offer of $44 a share would represent a premium of 32.7 percent over Avon's Monday closing price of $33.16.

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