Avon Investors File Lawsuit
San Diego, CA -- 04/16/2012 -- At least three investors filed lawsuits against directors of Avon Products, Inc. over their alleged failure to properly consider the takeover offer by Coty.
On April 2, 2012, Coty Inc. announced that it has submitted a non-binding proposal to acquire Avon Products, Inc. for $23.25 per share in cash. Shortly after the announcement was made public the board of directors of Avon Products, Inc. rejected the offer.
The plaintiffs allege the actions by the directors were unreasonable and motivated purely by their own selfish interest in preserving their position on the Board of directors. The plaintiffs say that despite Avon Products' "prolonged underperformance, disastrous recent financial results, and substantial uncertainty about its future prospects and direction", defendants rather than considering the premium being offered to shareholders or negotiating a higher bid, within an hour of receiving the bid flatly rejected the proposed transaction.
The plaintiff claims that under these circumstances, defendants have breached their fiduciary duties and deprived Avon's shareholders of substantial value in the form of an offer at a premium of almost 24% of the Company's trading average for the past 20 days, and an approximately 20% premium to its March 30, 2012 closing price.
NYSE:AVP shares jumped after the takeover announcement on April 2, 2012 to $22.97 and closed on April 13, 2012 at $23.52 per share.
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