June 13, 2017
L’Oreal to Sell The Body Shop to Natura in $1.1B Deal
Sao Paolo, Brazil-based direct seller Natura Cosmeticos SA is currently in exclusive talks with L’Oreal SA to buy The Body Shop, the French cosmetics giant’s lotions and soaps retailer that was founded by British entrepreneur Anita Roddick in 1976. The deal is reported to be for US$1.1 billion (€1 billion euros).
In February, L’Oreal confirmed it was considering selling The Body Shop, which it bought for $833 million (£652 million pounds) in 2006. Sale of The Body Shop, which has more than 3,000 stores in 66 countries, immediately attracted a wide range of bidders. Last month it was announced that Natura was among the final bidders, joining private equity suitors CVC Capital Partners, Advent International Corp. and Investindustrial Advisors SpA as the firms vying for the 40-year-old chain. Last Friday, L’Oreal said it had received a firm offer from Natura, and that the proposed deal put an enterprise value (equity plus debt) of €1 billion on the business.
Roddick was innovative in the mass marketing of cosmetics made without animal testing and with natural ingredients, and The Body Shop earned the reputation as an eco-friendly company. However, L’Oreal has seen profits decline due to increased competition from newcomers offering similar products based on natural ingredients with no animal testing. Operating profit dropped 38 percent to €33.8 million last year.
Natura, the largest cosmetics company in Brazil and the ninth largest direct seller in the world, is recognized as an eco-friendly company as well. Jean-Paul Agon, Chair and Chief Executive Officer of L’Oreal, said Natura was “the best new owner we could imagine to nurture the brand DNA around naturality and ethics.”
Added Guilherme Leal, Co-chair of Natura’s Board of Directors, “Natura and The Body Shop have always walked in parallel, and today their paths meet. The complementarity of our international footprints, the sustainable use of biodiversity in our products, a belief of ethics in management and fair relations with communities, and a high degree of innovation constitute the pillars of the journey on which we are now embarking.”
In acquiring The Body Shop, Natura bolsters its international expansion. In 2013 the company purchased Australia’s Aesop for US$70 million. Aesop has 261 locations in 20 countries.
The deal should be finalized later this year.