NEW YORK (AP) -- Coty came calling, but Avon slammed the door.
Struggling direct cosmetics seller Avon Products Inc. on Monday rejected a $10 billion buyout offer from Coty Inc., a smaller beauty products maker looking to capitalize on Avon's business woes.
It is the largest takeover offer by far from New York-based Coty Inc., which has snapped up smaller beauty brands like OPI nail polish and Philosophy Inc. skin care, in the past two years.
The $23.25-per-share bid also underscores the weakness at Avon, which has been beset by a foreign bribery investigation, weakening sales and a leadership vacuum.
The deal, should it go through, would be the biggest acquisition in the U.S. this year, according to research firm Dealogic. And it would be the largest in the retail sector globally since 2007.
Coty is controlled by German holding company Joh. A. Benckiser GmbH, which also operates consumer products company Reckitt Benckiser Group plc.
Coty has about $4 billion in annual revenue. It has said it wants in increase that to $7 billion by 2015. Adding Avon's $11 billion a year in revenue would far surpass that goal. The deal also would strengthen Coty's hand in emerging markets.
The company is mainly known in the U.S. for its fragrances sold under the names of celebrities including Beyonce, Lady Gaga and Celine Dion. Its top-selling fragrance brand is Calvin Klein.
Coty went public with the Avon bid Monday to put pressure on Avon to negotiate. The offer, which isn't binding, is a 20 percent premium to Avon's Friday closing price of $19.36. Coty also said it won't pursue a hostile takeover.
Avon's stock rose $3.36, or 17.3 percent, to $22.72 in afternoon trading. Still, the stock is down 39 percent from its 52-week high of $31.60 last May and less than half of its all-time high of $46.11 in 2004.
Avon said the bid undervalues the company and quickly rejected it.
It's been a steep slide for an American fixture. Avon was founded in 1886 and made its "Avon ladies" selling products door to door and to friends and family a household name.
But North American sales have been in a long decline. Now, about 80 percent of Avon's revenue comes from overseas.
Avon's profit has shrunk over the past three years. It has frequently missed analysts' earnings expectations and posted disappointing sales in some of its largest markets, including Brazil and Russia.
The company faces a bribery probe that started in China and widened to other countries. The Securities and Exchange Commission is investigating Avon's contact with financial analysts in 2010 and 2011 related to the investigation.
Investors and analysts have blamed CEO Andrea Jung for the problems. In December, Avon began seeking a replacement for Jung, who plans to remain chairman.
Avon's business problems and stock decline made it a tempting target, Morningstar analyst R.J. Hottovy said. Still, he thinks the offer was a bit low. He values Avon's stock at about $25.
The companies' differing business models would make a combination tricky, he said.
"It would be very difficult for a direct-sales model to be integrated into a traditional consumer product company," he said.
Coty said in a letter to Avon that its proposal would not interfere with Avon's CEO search. Coty also said it is willing to consider boosting the bid more if Avon can show it is worth more.
But Avon said that Coty's non-binding bid is not a real offer.
"Coty is attempting to obtain a 'free look' at Avon on the absence of any commitment whatsoever to close a transaction at any price," Avon said.
Coty said it would call the combined company Avon-Coty.
Coty was founded in Paris in 1904 by Francois Coty, who is considered a pioneer in the fragrance industry.
The New York company, whose products are sold in 135 markets globally, says on its website that it had revenue of almost $4.1 billion for the year ended June 30, 2011, more than half coming from perfume.