Administrators are closing in on a deal to sell U.K.-based ethical health and beauty retailer The Body Shop after the high street and mall cosmetics chain went into administration in February with over 80 stores shuttered, the closure of its U.S. business and the loss of around 500 jobs.
A takeover team fronted by the former chief executive of upscale retailer Molton Brown, Charles Denton, has been officially lined up to complete a rescue takeover deal as administrators announced that they had agreed to an “exclusivity agreement” after “a competitive bidding process”.
The agreement has been entered into by a consortium led by investment platform Auréa group, with Auréa itself led by British millionaire Mike Jatania as well as a former senior executive at Swiss investment bank UBS.
It owns brands including plant-based cosmetics firm Herbivore Botanicals, natural haircare brand Scandinavian Biolabs, plus Decypher, which produces and sells foundation makeup. Jatania previously ran Lornamead, which owned personal care brands including Lypsyl, Woods of Windsor, Yardley and Harmony haircare. He sold the business to Li & Fung for about $200 million over 10 years ago.
Administrators Hopeful Of Deal
A joint statement from the administrators for The Body Shop International, FRP Advisory, and Auréa group said: “Following a competitive bidding process, the joint administrators of The Body Shop International have now entered into an exclusivity agreement with a consortium led by Auréa group…While the deal is not yet complete, we believe the combined experience of the consortium, together with the existing management team, represents the best outcome for creditors and will ultimately ensure the long-term success of The Body Shop.”
The administrators had been encouraged by the level of interest in The Body Shop from potential bidders, with around 70 companies making initial enquiries. Among those were U.K. fashion, furniture and homewares retail stalwart Next, which had approached administrators to acquire part of the chain amid plans to launch a company voluntary arrangement (CVA) – broadly the U.K. equivalent of Chapter 11 – in which The Body Shop would enter talks with creditors.
FRP Advisory announced earlier this year that The Body Shop would be put up for sale for the second time within a year as the administrators decided to launch an auction of the chain after deciding that an alternative restructuring was not viable despite completing a store closure and redundancy program, which roughly halved the U.K. store estate from 198 stores to around 100 stores.
In March, The Body Shop fell into administration in the U.S. and Canada and shuttered its North American operations.
Controversy Over Aurelius
Private equity firm Aurelius, which placed The Body Shop into administration within months of acquiring it late last year, was also understood to be one of those preparing a bid to regain ownership but its short tenure as owner of the company had been hugely controversial.
Last year, Brazilian beauty group Natura & Co sold the high street chain to Aurelius in a deal that valued it at just shy of $260 million, considered a cut-price value at the time. However, it emerged earlier this year that the private equity company had only paid circa $4.5 million upfront for the chain.
Unsurprisingly, The Body Shop’s collapse has therefore raised questions over just how much Brazilian beauty giant Natura can actually expect to receive for the retailer beyond the initial payment.
The Body Shop, which is headquartered in London and employed around 7,000 staff before the acquisition, had operations in 89 markets with over 900 company-owned stores in 20 countries and partnerships with head franchisees which operated circa 1,600 franchised stores in a further 69 geographies.
It has already slimmed or closed operations in a number of markets as part of the reorganization of the business.
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