Pressure at Avon Builds as Bass Hikes Stake

Robert M. Bass Group, the Texas takeover concern, said Tuesday that it and partners hold 5.9% of embattled Avon Products Inc., and analysts said the stake may put further pressure on the cosmetics firm to merge or be taken over.

Avon shares closed up 75 cents at $36.125 in New York Stock Exchange trading.

Trading in Avon’s shares was heavy, with more than 1 million changing hands, and analysts said the Bass statement could heat up any fight for Avon, which has vowed to stay independent.

“The thing has been in play since May. More and more of the stock is in fewer and fewer hands,” said Deepak Raj, an analyst at Merrill Lynch in New York.

“But there’s no bid on the table,” he added.

An Avon spokesman said Robert Bass had told Avon Chairman James Preston the purchases were made “for investment purposes only.”

But since at least two other shareholder groups have made overtures about a merger or takeover, analysts said the Bass stake would increase pressure on Avon management.

“It’s a squeeze play,” one said.

Investment group Chartwell Partners holds at least a 6.9% stake. It said it may propose a merger with the company, but has made no bid.

The Bass group said in a filing with the Securities and Exchange Commission that its stake was an investment and that it has had talks with Avon management.

The talks, which may continue, were about Avon’s recent history and business outlook, said the group, the investment vehicle of billionaire Robert Bass of Ft. Worth, Tex.

Bass also said it may hold discussions with other persons, including other Avon shareholders. It gave no indication in the filing of what issues might be discussed in such talks.

The Bass group is a leading player in corporate takeovers, sometimes profiting as a minority shareholder and sometimes acquiring control. Its investments have spanned banks, media companies, information groups and real estate.

Avon’s managers in the past week have publicly reaffirmed their desire to retain control after months of takeover speculation that began in May, when Amway Corp. made a $39-a-share bid for the company.

Amway held a 10.3% stake with Minneapolis investor Irwin A. Jacobs, who raised this to a “possible price” of $41 a share, or $2.2 billion, on Aug. 1.

Avon, the leading U.S. direct marketer of cosmetics, jewelry and personal products, turned down both offers.