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 Avon said it had not received any such offer.
The purported acquirer, which identified itself as PTG Capital
Partners, said in a U.S. Securities and Exchange Commission filing
on Thursday it would pay $18.75 per share for Avon. (http://bit.ly/1A2HwEy)
Shares of Avon peaked at $8 and ended up 6 percent at $7.07 even
after many traders doubted the veracity of the offer. About 69.5
million shares changed hands, mostly after news of the filing broke,
on the stock's busiest day since March 20.
Attempts to reach contacts listed in the filing - a law firm named
Trose & Cox in Texas and PTG itself in London - were unsuccessful.
The U.S. Securities and Exchange Commission had no immediate comment
on the veracity of the filing.
The filing contained multiple errors of grammar, and PTG also called
itself TPG in places. TPG, a prominent private equity firm in Fort
Worth, Texas, said it is unrelated to PTG.
The filing also lifted chunks of text from TPG's website to describe
itself and provided a contact address similar to TPG's in Fort
Worth.
In a statement referring to PTG, Avon said it "has not received any
offer or other communications from such an entity, and has not been
able to confirm that such an entity exists."
Edgar filings are "largely automated," the SEC's website states,
noting that the information is provided by filers and the SEC staff
"generally does not correct errors" or intervene in the process. The
staff will consider requests to correct errors in rare and unusual
situations," it adds.
Whoever wishes to file on Edgar can apply for a password by
submitting an online form, said Scott Kimpel, a partner at
Washington, D.C. law firm Hunton & Williams who previously worked at
the SEC.
"Unless you write on it, 'My name is Mickey Mouse and I live on the
moon,' they approve it. There is no review. There is no way for them
to tell if someone is in fact who they say they are," said Kimpel,
noting the large number of filings on the website every day.
Bloomberg reported that the regulator's enforcement division is
reviewing the legitimacy of the offer, citing a person with
knowledge of the matter.
According to the SEC's Edgar company database, PTG is incorporated
in British Indian Ocean Territory, an archipelago between Africa and
Indonesia with no civilian population, according to the CIA's
factbook. A spokesman for the UK Foreign Office said there is no
corporate register in this territory.
Avon's stock was halted three times on Thursday due to volatility
after the initial reports.
"This was false information; it may be incredibly difficult to
ascertain whomever was selling stock at those prices, who was the
guilty party. So they should cancel all trades, that would be the
fair thing to do," said Stephen Massocca, chief investment officer
at Wedbush Equity Management LLC in San Francisco.
[to top of second column] |
Avon appeared to be the latest victim of a long list of phony
takeover offers.
In January 2012, a court ruled against Allen E. Weintraub and his
Sterling Global Holdings for purported tender offers made for
Eastman Kodak Co <KODK.N> and American Airlines parent AMR Corp, in
a case brought by the SEC.
In December 2012 shares of Rocky Mountain Chocolate Factory <RMCF.O>
spiked after an apparent takeover bid filed with the SEC that the
candy maker suggested was likely bogus.
In 2007 the SEC sued a certain Theodore Roxford, also known as
Lawrence Nire, for fraud. It accused him of buying shares or stock
options of five companies and then announcing fake takeovers to
drive up prices.
While some traders said the filing quickly raised red flags for
them, others may not have been so lucky.
At 11:53 a.m. EDT, a trade of slightly more than 2 million Avon
shares was executed at the session high of $8 each, Thomson Reuters
data show. Four more trades were executed at the same price,
milliseconds after the first one. The largest of the four was just
for 3,500 shares.
"Some people made a lot of money and some people lost a lot of
money," said Seth Setrakian, partner and co-head of U.S. equities at
First New York Securities.
"There's never a refund or a money back guarantee. I haven't found
it yet," Setrakian said.
A spokeswoman for the New York Stock Exchange, where Avon is listed,
had no comment.
RBC Capital Markets analysts expressed surprise that an acquirer
would pay more than $8 billion for Avon given its $2.9 billion value
when the market opened on Thursday.
(Reporting by Siddharth Cavale and Yashaswini Swamynathan in
Bengaluru, Tom Bergin and Martinne Geller in London and Sinead Carew,
Rodrigo Campos, Chuck Mikolajczak, Michael Erman and Suzanne Barlyn
in New York; Sarah Lynch in Washington D.C.; Editing by Ted Kerr and
Richard Chang)
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