Avon's Bogus Bid Sends Shares on Wild Ride
Shares of the struggling cosmetics company Avon (NYSE:AVP) went wild on Thursday after a firm called PTG Capital Partners, in a filing with the Securities and Exchange Commission, made an offer to buy the company for about three times its current price.
Avon’s stock was halted twice for volatility on the news, and surged as much as 20% during the trading day, to $8 per share, before falling back to earth, trading up a little north of 3%.
(Source: FactSet)
Unlike most regulatory filings, the one submitted by PTG Capital was riddled with spacing errors, and at one point, referred to itself as “TPG” Partners. TPG is a global private equity firm with $67 billion in capital under management.
Avon, however, said in a statement “it has not received any offer or other communication from such an entity and has not been able to confirm that such an entity exists.”
In recent months, speculation has run rampant over Avon’s possible suitors. In January, TPG was rumored to have been in discussions with the cosmetics maker, though neither company confirmed the talks had taken place. In November 2010, TPG paid about $90 million cash for Avon’s 74.67% ownership stake in Avon Japan.
In April, the Wall Street Journal reported Avon was exploring options for a possible sale of its North American unit, amid plans for company CEO Sherilyn McCoy to outline turnaround plans in May. Those plans were not unveiled as expected. As the WSJ reported citing people familiar with the matter, a last-minute decision was made to postpone the strategy until the fall.
In its most recent quarter, Avon reported an 18% drop in revenue to $1.8 billion. On a constant dollar basis, which excludes currency fluctuations, Avon said revenues rose 1%. On the bottom line, the company reported a 67% plunge to 4 cents a share during the period.
Calls and messages to PTG Capital were not returned.
The SEC declined to comment on the news.
Shares of Avon were trading 5% higher in recent action, around $7.02 per share.