The Body Shop is set to be sold to Brazil's Natura Cosmeticos for €1bn, L'Oreal says

Courtney Goldsmith
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Body Shop Agrees To Takeover Bid
A number of bidders have been courting The Body Shop in recent weeks (Source: Getty)

L'Oreal today announced it has entered exclusive discussions to sell The Body Shop to Brazilian firm Natura Cosmeticos.

The proposed transaction value of the ailing ethical beauty brand is €1bn (£880.4m).

L’Oreal bought The Body Shop in 2006 for £652m, and it had intentions to expand the company three times bigger than the current number of 1,000 shops.

Founded in Brighton, the high street chain now has stores in 66 countries, but total sales in 2016 were €920.8m (£783.8m), down from €967.2m in 2015.

Natura is a surprising winner in the bid for the beauty brand, which included second round bids from private equity group CVC and China's Fosun.

Read more: Alibaba's Jack Ma invited to join bidder in race for The Body Shop

"I am very pleased to announce Natura as the potential new 'home' for The Body Shop. It is the best new owner we could imagine to nurture the brand DNA around naturality and ethics," said Jean-Paul Agon, chairman and chief executive of L'Oreal.

"Natura will support The Body Shop development in the long-term and enable The Body Shop to best serve its customers while respecting its strong commitments towards its employees, franchisees and stakeholders."

Jeremy Schwartz, chairman and chief executive of The Body Shop agreed that Natura's ethical values and expertise make it a perfect new owner to breathe life back into the brand.

Natura, which also owns the beauty brand Aesop, said the move is a step towards the internationalisation of its business.

"Natura and The Body Shop have always walked in parallel, and today their paths meet,” said Guilherme Leal, co-chairman of Natura.

“The complementarity of our international footprints, the sustainable use of biodiversity in our products, a belief in 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."

Read more: Chinese healthcare group plots £600m bid for The Body Shop

The takeover comes at a crucial time when many consumers are redefining their priorities and ethical consumption is topping agendas, said Hannah Symons, beauty and personal care analyst at Euromonitor.

"Whilst the majority of The Body Shop’s 2016 sales came from developed markets, Natura’s strength lies in the emerging regions, account for 98 per cent of its value in 2016. Undoubtedly this exposure will provide a necessary springboard for The Body Shop to expand further into valuable emerging territories to help revive growth," Symons said.

The deal is expected to close in 2017, Natura said.

Read more: The Body Shop buyout well underway

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