The company is conducting an auction process for a private investment in public equity (PIPE) with firms including Cerberus Capital Management and Platinum Equity, the WSJ reported, citing people familiar with the matter.

Bids for the auction are due next week, the paper said, adding that such an investment is just one of the options Avon is looking at.

It is unclear what the size of the stake would be or if the deal would go through, the WSJ said.

Avon, valued at nearly $2 billion as of Wednesday's close, declined to comment. Platinum Equity and Cerberus also declined to comment.

Avon's shares were down for most of Thursday before being halted for market volatility. They resumed trading after the WSJ report was published and spiked as much as 12.6 percent. The stock has since reversed course to trade down 4 percent at $4.34.

The company has been struggling to reverse a decline in sales for nearly four years, as it loses representatives – the so-called "Avon Ladies" – in the United States and as it grapples with weak demand in Brazil.

The report comes about four months after Avon was the target of a bogus takeover bid made by a firm calling itself PTG Capital Partners.

The firm, incorporated in a remote archipelago in the Indian Ocean, offered on May 14 to buy Avon for $18.75 per share, nearly three times the company's value at that time.

The U.S. Securities and Exchange Commission has since charged a Bulgarian man with being an architect behind the hoax.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)