NEW YORK (AP) -- Struggling Avon Products Inc. on Monday rejected a buyout offer worth about $10 billion from beauty company Coty Inc.
Coty went public with the bid for Avon Monday. It said the offer was an increase from a previous bid of $22.25 per share. The new offer is a 20 percent premium to Avon's Friday closing price of $19.36.
Avon, known in the U.S. for its "Avon ladies" who sell products door to door, saw its stock surge 19.5 percent to $23.13 in premarket trading.
But Avon said Monday that the offer is basically the same as Coty's previous one. Avon said its board still believes Coty's offer is not in the best interest of shareholders and that it substantially undervalues the New York company.
Avon, which reported a fourth-quarter loss in February, is searching for a new CEO after struggling to improve results and wind up a long-running overseas bribery investigation that began in 2008.
The company has restructured and cut jobs. But its profit has shrunk over the past three years, and the bribery investigation has widened. To placate critics, in December Avon said it would seek a replacement for longtime CEO Andrea Jung, who plans to remain chairman.
Coty, whose brands include Davidoff, OPI and Sally Hansen, said in a letter to Avon that its proposal would not interfere with Avon's CEO search.
Avon, with brands including Skin-So-Soft and Avon Color, said it is committed to its process of hiring a new CEO and believes that it will be worth more than Coty's takeover proposal with a new CEO in place.
Coty said Avon wouldn't engage in buyout talks and that it was taking its bid public so Avon shareholders would be aware of its proposal. But Coty said it has no plans of pursuing a hostile takeover.
Coty, which is known for its fragrances and nail products, said in its letter that a combined company would help give it a stronger foothold in emerging markets. While Coty gets 26 percent of its revenue from emerging markets, Avon gets more than 68 percent of its revenue from this segment.
Coty said Avon's global network of salespeople would help it grow more quickly in emerging markets, where many beauty products are dominated by door-to-door sales.
Coty said it is willing to consider boosting the bid more if Avon can show that there is greater value.
But Avon said that Coty's indication of interest is non-binding and does not imply 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 that if a deal were to occur, the combined company would be called Avon-Coty.