NEW YORK -- Avon Products Inc.'s board Wednesday rejected a $2.1 billion takeover bid from Amway Corp. and the Michigan company withdrew the offer in an exchange of vituperative statements.
Amway last week offered $39 a share for all the outstanding stock of New York-based Avon, believed to be the largest company in the comestic and household goods direct sales business. Avon said flatly at the time it was not for sale.
In an open letter Wednesday to the co-founders of Amway, his chief competitor in the door-to-door sales market, Avon Chairman James E. Preston reiterated that his company was not on the auction block but said the board had 'carefully considered' the proposal.
He told Amway Chairman Jay Van Andel and President Richard DeVos that the Avon board had unanimously rejected the offer because it was not in the best interests of the company or its shareholders.
'We demand high morals,' Preston said in the letter. 'Our customers depend on our honesty; they give us their trust. But your company is an admitted criminal.'
Amway settled criminal charges relating to payment of Canadian customs duties with the payment of a $25 million (Canadian) fine and civil charges still are pending.
In a statement issued Wednesday night, Amway said it had 'decided to withdraw its $39 cash per share offer for Avon's common stock and does not presently intend to pursue the proposed acquisition so long as the Avon board of directors maintains its current hostile position that the company is not for sale under any circumstances.'
Spokesmen for the New York firm of Kekst and Co., which issued the statement on Amway's behalf, could not be reached for elaboration on the sudden withdrawal of its bid. Amway's own spokesmen at the company's Ada, Mich., headquarters declined comment.
In his letter, Preston told the Amway executives 'Avon's outstanding business reputation, established over more than a century, would suffer greatly if you took control.'
He also scored Amway for forming a partnership with Minneapolis investor Irvin Jacobs, who had joined forces with the Michigan company to acquire 10.3 percent of Avon's stock. Jacobs is not believed to be part of Amway's offer for Avon.
The letter said Jacobs, as Amway's tactical adviser, stood 'to make a killing' at Avon shareholders' expense because of his insider knowledge of the takeover bid.
'Your tactics reflect badly on your corporate morality,' the Avon chairman said. 'In our view, they raise serious questions of illegality, and we have asked federal enforcement offficials to promptly investigate these matters.'
Amway, in its response, said 'the allegations made by Avon in its letter today are baseless, reckless and defamatory,'
The Michigan company denounced the Avon letter as 'hysterical, irresponsible ... irrelevant' and 'vicious and irrational.'
Preston said Avon's new management is focusing on the direct selling and beauty businesses and reducing expenses dramatically.
He also said Avon is confident that the long-term value of Avon stock, which lost 12.5 cents to $40.125 a share on the New York Stock Exchange Wednesday, was 'signficantly higher' than Amway's $39-a-share offer.
Amway said Avon never claimed the offer price was inadequate and ignored the issue of potential benefits to its shareholders, making only 'a vague promise of possible future value enhancement.'
'We question the credibility of that promise, because the performance of Avon management over the past several years provides no basis to believe that Avon's shareholders will ever realize greater value for their investment,' Amway said.