L'Oreal shakes up make up

L'Oreal is considering a takeover offer for Avon Products. Photo / Babiche Martens

A shake-up for the cosmetic industry has been tipped, with stock in Avon Products rising after a report L'Oreal may make an offer for the world's largest door-to-door make-up seller.

L'Oreal is considering a bid of US$44 ($58.16) a share for Avon, the UK's Daily Mail reported.

A bid at that price would be worth about US$19 billion, based on Avon's shares outstanding as of June.

The cosmetics retailer is attracting interest from several companies, including L'Oreal, the Daily Mail said.

Avon, whose sales topped US$10 billion last year, gets more than 70 per cent of its revenue from its beauty business.

About 40 per cent comes from Latin America, where consumers are more accustomed to buying cosmetics, skin care and fragrances from door-to-door vendors.

Avon has "momentum in terms of operational improvements and sales heavily weighted toward developing markets", said Rick Jones at NCM Capital Management Group.

L'Oreal, the world's largest cosmetics maker, and rivals including Procter & Gamble are chasing growth in emerging nations, where demand for beauty products has surged as people earn more money.

Asia and Latin America should represent 50 per cent to 60 per cent of L'Oreal's business in 10 years, chief executive Jean-Paul Agon said in May.

Stephanie Carson-Parker, a spokeswoman for L'Oreal, declined to comment, as did Jennifer Vargas, an Avon spokeswoman.

Avon has said it is examining whether to move out of businesses such as home cleaning and appliances to focus on more profitable businesses.

The company, led by chief executive Andrea Jung, agreed in July to buy jewellery company Silpada Designs to expand its product line.

Mergers and acquisitions in the personal-care industry have picked up lately.

Unilever agreed to buy Alberto in September to add Nexxus and VO5 hair products, while Reckitt Benckiser Group in July bought SSL International, the maker of Durex condoms.

- BLOOMBERG