L’Oréal has entered into exclusive negotiations for the sale of The Body Shop to Natura Cosméticos S.A. after the Brazilian company made an offer that values The Body Shop at an enterprise value of €1 billion or $1.1 billion. The transaction could be a perfect fit for both the buyer and seller. L’Oréal announced its desire to divest The Body Shop back in Q1’17 as the brand and retailer has underperformed in growth, operating margins and return on capital relative to L’Oréal due to lack of differentiation and increased competition in the retail beauty and personal care sector. The acquisition allows Natura to further expand its international presence outside Brazil and Latin America and further diversify its channel mix from its traditional direct sales model. Furthermore, The Body Shop aligns well with Natura’s focus on natural cosmetics, sustainability and brand ethics.
L’Oréal acquired The Body Shop in 2016 for a reported price of £652 million or $1.1 billion at the then current exchange rate. The purchase price exceeds earlier rumors which had pegged the valuation for The Body Shop closer to €800 million or $900 million. In 2016, The Body Shop generated net sales of €921 billion or $1.02 billion, implying a revenue multiple of 1.1x. The transaction is subject to regulatory approval in Brazil and the United States and is expected to close in 2017.