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Private equity firm Aurelius to acquire The Body Shop

The Body Shop employee
The Body Shop has 2,500 stores across the globe.

The Body Shop is getting a new owner — for a bargain.

Brazil-based cosmetics conglomerate Natura & Co said it reached an agreement to sell the natural beauty products pioneer to U.K. private equity group Aurelius. The transaction is valued at £207 million ($254 million), a steep decline from the $1.2 billion Natura paid to acquire The Body Shop from L’Oréal in 2017.

The deal comes as Natura, which also owns Avon, is paring back parts of its portfolio as it looks to return to profitability after six consecutive quarters of losses. In April, it sold luxury beauty and wellness brand Aesop to L’Oréal for $2.5 billion.

The Body Shop, which has approximately 2,500 stores across the globe, has struggled in recent years amid increased competition and changing consumer behavior. In April, David Boynton, who had served as CEO since 2017, stepped down, succeeded by Natura board member Ian Bickley.

“The Body Shop’s recent struggle has been driven by consumers trading down to more affordable retailers, casting aside sustainability and ethical claims in favour of value for money and lower price points," commented Tash Van Boxel, analyst at GlobalData. "If new owner, Aurelius, hopes to improve the fate of The Body Shop, the focus must be on broadening its pricing architecture to stem the flow of consumers switching away to value players and discounters."

In August, Natura disclosed in a filing that that its board of directors had recently authorized management to explore strategic alternatives for The Body Shop, including a potential sale of this business. In September, Natura executives said on a call with analysts that the brand was weighing on its bottom line. 

“With the transaction, Natura & Co will continue its drive to refocus on its strategic priorities, notably accelerating the integration of the Natura and Avon brands in Latin America, focusing on its core relationship selling model, and further optimizing Avon International's footprint,” the company said in a statement.

Aurelius’ retail holdings include U.K. streetwear and sportswear retailer Footasylum, Lloyds Pharmacy and global catering group LSG Sky Chefs. The firm said it seeks to enhance ESG aspects in its portfolio companies and is committed to maintaining The Body Shop's long-standing, distinctive values  instilled by founder Dame Anita Roddick.

“We are delighted to be undertaking this acquisition of an iconic British brand, which pioneered the cruelty-free and natural ingredient movement in the health and beauty market,” said Tristan Nagler, partner at Aurelius. “We look forward to working with CEO Ian Bickley and his team to drive operational improvements and re-energize the business and help to deliver the next chapter of success.

Body Shop CEO Bickley described the sale as an historic moment for The Body Shop “as we join forces with Aurelius to begin a new chapter, allowing us to continue building the relevancy of this global brand for future generations.”

“We are deeply grateful to Natura & Co for their unwavering support and I'm looking forward to working hand in hand with Aurelius as we adapt and flourish in new global retail environments, always with an eye on sustainable and profitable growth,” he said. 

Analyst Van Boxel said that Aurelius should work on expanding the appeal of the Body Shop  via partnerships and in-store concessions. 

"This will enable the retailer to reach a more varied audience and ensure that it can take advantage of the ongoing demand in the sector," Van Boxed added.

The closing of the transaction is expected to occur by December 31, 2023, and is subject to customary regulatory approvals. Morgan Stanley served as financial advisor and Cleary Gottlieb Steen & Hamilton as legal advisor to Natura & Co.

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