Cosmetics Firm ‘Not for Sale’ : Two Suitors Calling, Avon Says, but It Closes Door

Cosmetics giant Avon Products Inc. today disclosed that corporate raider Irwin Jacobs and door-to-door home products seller Amway Corp. together bought 10% of its stock, but Avon said it is not for sale.

Avon stock jumped $4.875 to $37 in initial trading after the news was announced.

Avon refused any further comment on widely circulated market rumors that Jacobs and Amway have made a buyout proposal.

The company said only that it “has been notified” that the partnership owns their stock, but Avon would not say who approached the company.

Avon is a worldwide cosmetics and direct selling company with sales of $3 billion in 1988. But it lost $404 million in the year due in part to the costs of a restructuring.

While declining to comment on whether an actual buyout proposal had been made, the company said, “We believe that Avon can provide the best value to its shareholders by remaining independent.”

For several days Minneapolis-based Jacobs has been rumored as a possible suitor for Avon and its stock has been actively traded. The entry of Ada, Mich.-based Amway was a surprise.

Jacobs was not immediately available to comment. Other parties rumored to be interested in Avon include Unilever PLC of Britain and Revlon Group Inc. chief Ronald Perelman.

Unilever has declined comment and Perelman was not immediately available to comment.

Takeover talk surfaced about Avon after Unilever last week said it ceased negotiations over the purchase of U.S. toiletries firm Faberge, analysts said.