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The Associated Press May 3, 2012, 5:34PM ET

Avon shares close up on report of takeover bid

Shares of Avon Products Inc. rose Thursday after a second media outlet reported that Richmont Holdings is readying a bid for the direct-seller of beauty products.

Bloomberg News reported Thursday that Richmont, which has owned stakes in the cosmetics company Mary Kay, as well as Avon, is arranging financing for a bid. Bloomberg said it spoke with two people familiar with the matter.

That follows a Fortune magazine report April 11 that Richmont was considering a bid.

Avon Products, whose brands include Avon Color, Skin-So-Soft and mark, declined to comment. Richmont Holdings did not return a call for comment.

Richmont Holdings' founder and chairman John Rochon is the former CEO of Mary Kay. Richmont's Web site says that Rochon was critical in the management-led leveraged buyout of Mary Kay in 1985, arranging the financing and executing the deal.

The Fortune report said Rochon led an attempted takeover of Avon that started in the late 1980s and ended in the early 1990s.

Richmont, once Avon's biggest stockholder, has sold its shares in the New York company, Fortune said.

Last month, Avon rejected a $10 billion takeover offer from smaller rival beauty products maker Coty Inc. Coty has said it still wants to meet with Avon and look at its books.

Founded in 1886, Avon became a fixture in households across the country as its legions of "Avon ladies" went door to door selling makeup to family, friends and acquaintances.

Now, Avon is in transition. New CEO Sherilyn S. McCoy, a long-time Johnson & Johnson executive, has been in place less than a month. She replaced CEO Andrea Jung, who had come under fire for failing to stem the company's declines and wrap up a bribery investigation.

Avon said Tuesday that its first-quarter net income fell 82 percent, hurt by a bigger restructuring charge and higher commodity and labor costs.

Avon held its annual shareholder meeting in New York on Thursday but did not comment on any other possible bids.

Shares of Avon rose $1.09, or 5.5 percent, to close Thursday at $21 and gained another 50 cents after hours, rising nearly to where they closed on Monday. They've risen almost 20 percent since the beginning of the year, though they remain well below their high for the past 52 weeks of $30.63, which they reached last May.

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