The strategy behind Natura’s offer to acquire The Body Shop
Yesterday Natura shared a slideshow laying out where the deal with L’Oréal stands, why the acquisition would be a win for Natura, and what assets would come along with The Body Shop.
Terms of the deal
Natura “has entered [into] an exclusive agreement with L’Oréal to acquire The Body Shop,” according to José Roberto Lettiere, chief financial officer of Natura.
The deal is expected to close this year. And Natura will pay for the brand in cash, financed by debt. Lettiere noted that for the purposes of this transaction the enterprise value of The Body Shop is €1 bn.
Outstanding conditions of the deal include regulatory approval in both the US and Brazil as well as review by L’Oréal’s employee representative body.
The same but bigger
João Paulo Ferreir, Natura’s CEO, believes that The Body Shop brand ethos is a good fit for his company, that it will do well alongside the Natura brand and the company’s Aesop brand. In yesterday’s presentation, Ferreir noted that The Body Shop brings a “highly complementary portfolio of products across categories.”
Beyond that, The Body Shop will grow the company’s reach. Ferreir explained that the acquisition will “transform Natura into a global omnichannel leader in personal care and beauty” and will create what is in essence a “3 brands, 3 channels, global footprint - value creation opportunity from cost and revenue synergies.”
What comes with it
Robert Chatwin, vice president of international for Natura, spoke during yesterday’s presentation to investors about the added benefits The Body Shop will bring to the company.
He noted that The Body Shop has “strong brand awareness, high repurchase rates from loyal consumers, [and] opportunities to increase digital retail.” Chatwin also pointed to the brand’s presence in over 60 countries around the world and noted that 51% of the brand’s net sales come from the EMEA region, 26% from APAC, 21% from North America, 2% from Latin America.
He pointed out the range of categories The Body Shop has product in: skin care, body care, makeup, bath and shower, fragrance, and gifts and accessories.
Chatwin also ran through some of the possibilities the acquisition will open up for Natura, like “The Body Shop direct selling in Latin America, Natura international growth acceleration, Aesop growth acceleration, access to [a] global supply chain, currency and geographic diversification,” and more.