Avon Boom

Avon Calling? Or Just A Clever Stock Market Trick?

For a short while today, Avon stock boomed with a spike in their stock price that quickly dropped back to it’s usual trading average. Why? It seems a company called PTG was planning a takeover of Avon and this is what led to the increase in stock sale prices and three separate halts on stock sales today. The only problem is that the London-based investment firm PTG Capital Partners Ltd. doesn’t actually seem to exist according to Fortune.

PTG Partners today issued an SEC filing with the intent of acquiring Avon at $18.75 per share. Their “About PTG Partners” is also impressive.

“PTG Partners is a global private equity investment firm, focused on leveraged buyout, growth capital and leverage capitalization, investment in distress companies and turnaround situations. We are problem solvers, partners and pioneers. TPG’s approach to investing helps us to recognize value — or the potential for value — where other cannot see it. This contrarian philosophy has delivered consistent and outstanding performance because we dedicate the right mix of capital, time, and management and operational expertise, to make successful investments out of challenging situation. This operational and management expertise enable TPG Partners to pursue turnaround opportunities that others are often unwilling to consider. We have an extensive track record of undertaking investments involving distressed financial situations and management turnarounds.”

Except when Fortune delved further into the Avon stock takeover filing, they discovered both PTG Partners Ltd. and its law firm, Trose & Cox LLC, have scant evidence of their existence. Sure there is a phone number and a physical address for each, but neither company have any web presence and when Fortune rang the phone numbers, neither connected to a real person. And did you notice the typos above? PTG twice referred to themselves as TPG, an actual company. When TPG was contacted however, they knew of no Avon takeover bid by their company.

Avon stock. Image credit: Yahoo Finance

So what’s the deal?

While sometimes the stock market can dip in response to information about companies, in Avon’s case, it was a financial boon. The Avon takeover story helped raise stock prices — however temporarily — and this may have been the agenda. According to Bloomberg, at the peak of the Avon stock trading frenzy, approximately $91 million of Avon stock was traded. However, it is not yet known where this hoax takeover originated from since according to CNBC, Avon has issued a statement saying it had not received an offer from PTG Partners Ltd. They also did not confirm PTG’s existence.

So how did this happen?

As yet no one is quite sure how this hoax Avon takeover occurred since there are very strict procedures surrounding getting a SEC filing into the EDGAR system. According to Bloomberg, all parties accessing the system must have privately-held confirmation codes and passwords. Although, there is a function that does allow third-parties to file certain documents to a company’s page — something that may be changed in the future if today’s Avon share scandal is anything to go by.

[Image credits: Avon website/Yahoo Finance via Fortune]

Comments