(Reuters) - Shares of Avon Products Inc fell 15 percent in premarket trading on Tuesday, after Coty Inc withdrew its $10.7 billion takeover bid for the world's largest cosmetics direct seller, saying Avon had missed its deadline to begin discussions.
Fragrance company Coty last week raised its unsolicited bid, which had the financial backing of Warren Buffett's Berkshire Hathaway
Avon's stock fell to $17.75 before the bell, below where it was trading before Coty's initial $10 billion bid was made public in April.
"We are struck by Avon's continued lack of communication with Coty," Bernstein Research analyst Ali Dibadj told Reuters.
"A bid with financial backing and reasonable starting point in terms of price must be looked at in order to fulfill one's fiduciary duty to shareholders."
In a client note, Dibadj also said more stakeholders had become supportive of Coty's bid, especially after Avon reported dismal first-quarter earnings earlier this month.
"Coty has been aggressive and courteous, while Avon has been rudderless and rude."
Avon, which had rejected all of Coty's earlier bids without entering into discussions, said on Sunday it would respond to Coty's latest offer within a week. However, Coty withdrew its proposal on May 14, five days after raising its bid.
"While Coty's bid provided a floor under Avon's stock, the withdrawal of this bid will push it to its fundamental level," BMO Capital Markets analyst Connie Maneaty wrote in a note.
The news leaves Avon shareholders hoping new Chief Executive Sheri McCoy can spark a turnaround at the company that has been struggling with plummeting profits on falling sales both at home and in some international markets.
"Ultimately the value at Avon that can be unlocked, if correctly executed, should be worth over $25 per share," Victoria Collin of Atlantic Equities LLP wrote in a client report.
(Reporting by Ranjita Ganesan in Bangalore and Phil Wahba in New York; Editing by Viraj Nair and Joyjeet Das)
