L'Oréal settles on Brazilian buyer for Body Shop

When the Body Shop was founded, its environmentally conscientious ethos, focus on natural products, and rejection of animal testing were groundbreaking and stood out in a crowded market of high street beauty brands.

Discussions have begun over the sale following "an extensive review" over the future of The Body Shop by its current owner of 11 years.

L'Oreal shares gained 1.6% in the opening 45 minutes of trading in Paris to change hands at €191.20 each at 9:22 CET, outpacing the 0.82% gain for the benchmark CAC-40 and extending the stock's three-month gain of nearly 8%.

"Natura will support the Body Shop development in the long term and enable [it] to best serve its customers while respecting its strong commitment towards its employees, franchises and stakeholders", said L'Oreal CEO Jean-Paul Argon in a statement, highlighting his optimism about the sale. Natura shares have gained 42 percent in the past 12 months, giving the company a market value of about $4.3 billion.

Jeremy Schwartz, chairman and chief executive of The Body Shop, added that the ethical values and expertise of Natura made it "the flawless new owner" of the chain, and said he was confident the move would help to rejuvenate the brand and drive future expansion.

It is thought to have attracted the attention of private-equity groups, including CVC Capital Partners, and China's Fosun. Its operating profit fell 38 percent to 33.8 million euros a year ago.

An acquisition by Natura would represent a major expansion of the Brazilian cosmetics company's retail activities, following up on its $70 million purchase of Australia's Aesop in 2013.

The chain runs 3,000 stores in more than 60 countries around the world, and past year generated net sales of €921m.

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

  • Zachary Reyes