NEW YORK -- Avon Products Inc. Tuesday snubbed a merger overture by Mary Kay Cosmetics Inc., a rival door-to-door cosmetics company, with Avon's chairman, in a now familiar refrain, stating the company is not for sale.
'We see no advantage to combining our operations through some form of leveraged buyout or other arrangement,' Avon chairman James E. Preston said in a letter to Mary Kay's vice chairman John Rochon.
Rochon wrote to Avon May 25 on behalf of an investment group expressing an interest in acquiring Avon, although a price was not named.
There was no immediate comment from representatives of Dallas-based Mary Kay regarding Avon's response.
'Avon's board has said that the company is not for sale and that this would be the worst time to sell -- just when Avon is in a strong turnaround,' Preston said in the letter released by Avon.
Senior managers of Avon, which rejected a $2.1 billion proposal from Amway Corp. two weeks ago, unveiled a plan May 19 to boost earnings per share by 20 percent annually over the next few years principally through cost reductions and beefed up direct sales revenues.
'We believe that turnaround is the best way to maximize value for our shareholders,' said Preston.
Since its rejection of the $39-a-share Amway bid, Avon has remained in the takeover spotlight. Last week, speculation abounded that Minneapolis investor Irwin Jacobs, who owns 10.3 percent of Avon's shares in partnership with Amway, or Mary Kay, which earlier this year approached Avon, would make an offer.
News of Avon's rebuke sent the price of its shares down $1.125 to $35.625 in mid-afternoon trading on the New York Stock Exchange.
'I think the ball is in Mary Kay's court because they didn't really make an offer in the sense of something with a firm price,' said Diana K. Temple, a securities analyst with Salomon Brothers Inc.
In his letter to Avon, Mary Kay's Rochon indicated that Mary Kay and Avon would each have separate identities and sales forces after a merger.
Mary Kay, which went private in a leveraged buyout in 1985, had sales of about $400 million last year. Avon had 1988 sales of about $3 billion.
Avon, however, has been under a heavy debt load due to an unsuccessful foray into health care earlier this decade. Avon plans to be completely divested of those businesses by later this year.
In A Separate development, animal rights activits said they will demonstrate outside Avon's six U.S. manufacturing plants and distribution centers this weekend to protest Avon's use of animals in certain product tests.
People for the Ethical Treatment of Animals said the demonstrations will be held in Atlanta, Cincinnati, Chicago, Pasadena, Calif., Ridgefield, Conn., Suffern, N.Y. and Newark, Del.