BTIG analyst April Scee weighed in with a few comments on Avon Products (NYSE:AVP), following rumors that private equity TPG Capital is in talks to acquire the company. The analyst rates the stock a Buy with a $14 price target, which represents a potential upside of 62% from where the stock is currently trading.

Scee commented: “We think TPG for AVP is possible, as TPG knows AVP, does turnarounds & could use EM distribution. However, change of control provisions increase cost & even with a 20% premium, we estimate 1/3 would already need to be cash or equity financed (higher than we’d expect from TPG). Economics could still be attractive to TPG, but we’re unsure investors would approve.”

The analyst continued, “TPG bought AVP’s Japanese subsidiary in 2010 so it knows what to do with an acquired direct sales biz. TPG has also done operational turnarounds (including BK etc. within consumer). Further, TPG has ~300 assets (many in consumer), some of which could theoretically utilize Avon’s EM route to market. However, acquisition does risk disruption in the sales force – an important consideration with direct sales businesses.”

Avon Products, Inc. manufactures and markets beauty and related products. It offers beauty products, such as color cosmetics, fragrances, skin care, and personal care products