Avon boosted by bogus private equity bid

By Simon Pitman

- Last updated on GMT

Avon boosted by bogus private equity bid

Related tags Stock market Avon

The big news last week was a fictional private equity company that filed an SEC document claiming it was about to buy up struggling Avon Products. But what few people expected was positive repercussions.

The phony takeover bid was filed to SEC electronically under the name PTG Capital last Thursday, causing share prices to spike significantly on the day.

Following on from the filing, Avon executives said they could not confirm the offer or details of the company and were treating it as a hoax, putting a big question mark over where share trading would go from there.

PTG Capital Partners does not exist

“In response to an SEC filing made by an entity purporting to be named "PTG Capital Partners," Avon reports that it has not received any offer or other communication from such an entity and has not been able to confirm that such an entity exists,”​ Avon said in its official statement.

After the initial spike that occurred before the hoax was confirmed, Avon share prices dropped again, but have remained at a significantly higher level, which has baffled many Wall Street experts.

The bogus offer outlined that the private equity company would buy shares at $18.75, more than $11 over the trading share price at the time of the filing and one that valued the company in excess of $8.2 bn.

Share prices remain higher despite hoax

The filing bought to attention serious shortfalls in the SEC electronic filing system that have underlined both security breaches and the potential for fraud in the system.

But the upstart was oddly positive for Avon, resulting in a much needed spike in its share price that has been sustained to some extent, even after the revelation that the filing was bogus.

Last Thursday Avon’s share price shot up 20% to nearly $8 during mid-day trading, but still finished trading on Monday, at $7.18 a share, significantly up from the $6.60 price the shares were trading before the filing was made last Thursday.

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