Brazil’s Natura to buy Body Shop for $1.48B
L’Oreal, the store’s owner, has been exploring it’s options as it contends with tough rivals
LONDON— As Britain struggles for political stability, one of the country’s retailing institutions is close to gaining a permanent new home.
Body Shop, the purveyor of coconut body butter and seaweed cleansing gel, is set to become part of Natura Cosmeticos SA after the Brazilian cosmetics firm entered exclusive talks to acquire the British chain from L’Oreal SA. Natura made a firm offer that values the U.K. retailer at € 1 billion ($1.48 billion), the companies said Friday.
A deal would open a new chapter for Body Shop, which was founded in 1976 by British entrepreneur Anita Roddick and has spent the last decade under the ownership of L’Oreal. For much of that period, the 3,000store business struggled to contend with tough competition, leading L’Oreal to announce in February that it was exploring its options. In Natura, it will gain an owner that shares its ideology in terms of ethics and natural products.
For L’Oreal, the planned transaction is “good news given the underperformance of the division in past years,” Hermine de Bentzmann, an analyst at Raymond James, said in a note. L’Oreal shares rose 0.3 per cent to € 188.9 at 10 a.m. in Paris as European markets advanced, making light of a U.K. election result that left the ruling Conservative Party short of an overall majority. Natura shares have gained 42 per cent in the past 12 months, giving the company a market value of about $5.78 billion.
An acquisition by Natura would represent a major expansion of the Brazilian cosmetics company’s retail activities, following up on its $94million purchase of Australia’s Aesop in 2013.
“The ethical values and expertise of Natura make it the perfect new own- er for the Body Shop to accelerate the rejuvenation of the brand and its future expansion,” the U.K. chain’s chairman and chief executive officer Jeremy Schwartz said in the statement.
For Natura, the move “will further strengthen our strategic aims of becoming more international and more diversified in terms of brands and sales channels,” CEO Joao Paulo Ferreira said separately.
“The ethical values and expertise of Natura make it the perfect new owner for the Body Shop to accelerate the rejuvenation of the brand and its future expansion.” JEREMY SCHWARTZ THE BODY SHOP CHAIRMAN AND CEO
The Brazilian company looks to have beaten off competition from private-equity bidders. CVC Capital Partners, Advent International Corp. and Investindustrial Advisors SpA were among firms that also made proposals, according to people familiar with the matter.
Body Shop operates across 66 countries. Its operating profit fell 38 per cent to € 33.8 million ($50.8 million) last year.
The € 1 billion value of the proposed transaction includes debt.