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Aesop parent wins battle for The Body Shop ownership

The Body Shop ownership battle is over with Brazil’s Natura winning with an unlikely €1 billion bid.

Natura, founded in 1969, is best known as the owner of the Aesop brand of natural-based cosmetics.

At £877 million, the winning bid was far higher than the £650 million analysts were expecting, and marginally higher than the £652 million owner L’Oreal paid for the brand in 2006.

Jean-Paul Agon, CEO and chairman of L’Oreal, described Natura as “the best new owner we could imagine to nurture the brand DNA around naturality and ethics”.

“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,” he said.

Some details of the takeover have yet to be confirmed, however L’Oreal has confirmed it is now in exclusive negotiations with the Brazilian owner.

Natura saw off several private equity companies in winning The Body Shop ownership race. But clearly the investment community saw less value in the brand than Natura. Investment bank Goldman Sachs was reportedly preparing a bid of just £600 million.

Despite having stores in 66 countries and more than 3000 outlets, The Body Shop’s annual turnover is only about half the size of Natura’s, which chalked up US$4 billion turnover last year. Founded in 1969, the majority of its income is from direct-selling model – it is larger than Avon in Brazil and has just 200 retail stores. Natura bought a 65 per cent stake in Australian-founded cosmetics brand Aesop in late 2012, taking full control of the business in December 2016.

Retail commentators have recently been critical of The Body Shop.

“The brand has become outdated and has failed to provide an innovative offer with exciting new products to entice customers into stores, causing the retailer to lose out to brands with more relevant beauty and skincare ranges,” GlobalData analyst Charlotte Pearce wrote in a column published by Inside Retail Asia in February.

Sales have been declining for successive quarters.

Natura’s co-chairman Guilherme Leal, said the deal would help the UK chain take a decisive step towards internationalisation.

“Natura and the Body Shop have always walked in parallel, and today their paths meet,” he said. “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.”

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