Updated to reflect Bank of America comments and updated share prices. NEW YORK (TheStreet) -- Privately held fragrance maker Coty has upped its unsolicited bid for Avon Products ( AVP) to $10.69 billion or $24.75 a share, in an effort to turn what was a hostile negotiation friendly. In raising its bid by roughly 6.5% from $23.25, Coty said it would need a confidentiality agreement from Avon Products and the ability to conduct due diligence on its bid by Monday. Avon Products, which recently reported weaker than expected first quarter earnings, had its credit rating downgraded and hired a new chief executive, has so far been unwilling to enter the friendly negotiations that come with Coty's bid increase.
In a letter disclosed by Avon Products on Thursday, Coty chairman Bart Becht is offering a $1.50 increase to the company's April 2 initial offer, in an effort to turn takeover negotiations friendly. The letter said that when first approaching Avon Products, talks started at $22.25 and rose by $1 when an offer was first publicly announced. Coty also unveiled Warren Buffett run- Berkshire Hathaway ( BRK.A) as an underwriter for the offer, which is contingent on siginificant debt and equity financing. In response, to Coty's initial bid valued at roughly $10 billlion, Avon Products immediately rejected the April offer. However, Thursday's play by Coty and its attempt to enter friendly negotiations may warrant a closer look. When releasing Coty's $24.75 a share offer, Avon Products said it would consider the bid "in due course." 7 Dividend Stocks You Can't Ignore Right Now >> Since the takeover battle first emerged, Avon Products has hired Sherilyn S. McCoy, a former Johnson & Johnson ( JNJ) executive as its chief executive after Andrea Jung stepped down as CEO in December, amid the company's underperformance and bribery allegations in its China-based business. When making its initial non-binding offer Coty said that a turn to friendly negotiations left open the prospect of a bid increase. The increase has come, but with under the condition that Avon Products change its posture. "As you know, we contacted Avon last week in an effort to break this deadlock. We indicated that we were prepared to engage in non-public discussions and discuss an increase to our proposal of $23.25 if substantiated through a three-week diligence process... we are revising our proposal to $24.75 subject to due diligence and the other conditions," said Becht in the letter. "We remain keenly focused on understanding Avon's operational and financial challenges, evidenced by your disappointing first quarter results and outlook, as well as your recent credit ratings downgrades. We need to confirm our synergy estimates, the availability of which will be critical to our final valuation and the reinvestment required to implement a turnaround of Avon." Becht also highlighted the Avon's operational expense and its exposure to litigation tied to potential violations of the Foreign Corrupt Practices Act as other reasons why it will only raise its bid when confidentiality agreements are signed. If Avon Products doesn't agree to the increased bid, Coty said it will withdraw its bid next Monday. Avon Products shares fell slightly in early Thursday trading to $21.55. The company's shares surged 9% on Wednesday when on reports of Coty's financing signaled a revival of the takeover offer after a month-long standoff. Still, shares are nearly 13% below Coty's offer, signaling continued uncertainty over the deal.