Source: Press Release 5/10/2012

Coty Raises Offer to Acquire Avon

The Board of Directors of Avon Products, Inc. received a letter from Coty Inc., dated May 9, 2012, raising Coty's offer to acquire the company to $24.75 per share. Excerpts of the letter follow:

Since we made public our non-binding proposal to acquire Avon for cash (the "proposal") more than a month ago, we have spent significant time listening to your shareholders and analyzing public information, including your most recent quarterly results. We continue to believe that our proposal would provide compelling value to Avon's shareholders relative to a difficult and uncertain multi-year turnaround on a stand-alone basis. The combination of Avon and Coty would create a global beauty company with broader innovation, branding and execution capabilities to benefit its customers, representatives and associates around the world.

We have been disappointed by the current stalemate. As you know, we contacted Avon last week in an effort to break this deadlock...

We remain keenly focused on understanding Avon's operational and financial challenges, evidenced by your disappointing first quarter results and outlook, as well as your recent credit ratings downgrades...

We are prepared to sign a confidentiality agreement with standstill provisions that would restrict us from taking further public steps in seeking to acquire Avon so long as you agree in good faith to provide us with requested information on a timely basis. Upon signing the confidentiality agreement, we anticipate we would need only several weeks to conduct expedited due diligence of Avon and finalize the terms of a possible transaction. We have attached to this letter a list of priority diligence items that we believe would enable us to form a definitive view of value beyond where we have arrived based on public information.

When we contacted you again last week, you advised us that Avon's Board of Directors was not prepared to engage in any discussions regarding any revised proposal until Avon had completed a strategic and operational internal review with its new CEO.

We and our equity sources are prepared to work until May 31, 2012 to see if we have a mutually agreeable basis for a transaction. If you are prepared to enter into discussions, we can, prior to this expiration date, determine whether there is an opportunity to provide significant and certain immediate value to Avon's shareholders.

In our final effort to move forward with discussions, we are revising our proposal to $24.75 subject to due diligence and the other conditions described below. This price represents a premium of over 36% to the original undisturbed closing price on March 6, 2012 before our initial proposal of$22.25 and also represents over $1 billion of incremental value to your shareholders, despite a materially weakened outlook for your business. Given the challenges facing your business, we believe the premium is even higher when considering your potential stock price in the absence of a possible transaction. If in our work we find considerably more positives than negatives, we would be prepared to propose a higher price; if we find more negatives than positives, it would be difficult to justify our revised proposal. If after due diligence our final proposal were to be unacceptable to you, we will simply indicate so in a mutually agreeable statement and part company as friends.

In order to end the uncertainty around this transaction for both your organization and ours, we request that you respond to our revised proposal by close of business on Monday, May 14th. If you choose not to engage with us, we will withdraw our proposal. Our intention is to submit this letter and our revised proposal to Avon's Board on a confidential basis. However, if you do not enter into discussions with us by May 14th, we will have to inform the public markets of the circumstances of our withdrawal...

We reserve the right to discontinue discussions regarding, and withdraw, our revised proposal at any time. Our revised proposal is subject to customary conditions, including, among other things, our satisfaction with the results of due diligence in our sole discretion, the negotiation of a mutually satisfactory definitive agreement, financing and the approval of the negotiated terms of a transaction by our Board of Directors.

I sincerely hope you will agree that your shareholders' interests will be best served by meeting with us to discuss our proposal.

With best regards, Bart Becht

View Avon Review

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