From the Wall St Journal: In investing circles, Warren
Buffett’s name is usually like sticking a Prada label on a handbag. But his
brand cuts both ways in deal making.
It emerged Thursday that Mr. Buffett’s Berkshire Hathaway might
provide $2.5 billion of a $10.69 billion bid for cosmetics group Avon Products
led by Coty Inc. On the plus side, having Mr. Buffett’s firepower at your
disposal makes an offer more credible. And Coty’s latest offer of $24.75 a
share is 6.4% above a previous bid last month.
Yet Avon’s stock fell 3.3% Thursday to $20.89. The immediate trigger was
likely Coty’s threat to walk if Avon doesn’t sit down to negotiate by Monday.
Avon had maintained Coty’s earlier bid was stingy.
Mr. Buffett’s money should make little difference on that
score: Price is price. Plus, his presence arguably gives Avon’s shareholders
and management more reason to dig in. With a reputation for seeking out
undervalued opportunities, Mr. Buffett’s participation hardly suggests Coty is
offering a premium price….
Want to know more? Check out http://blogs.wsj.com/overheard/2012/05/10/buffetts-avon-makeover/
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