The owner of health and beauty specialist The Body Shop is holding out for between £400m and £500m for the retailer, despite the first deadline for bids passing without any concrete interest from prospective buyers.
Retail Week understands Morgan Stanley, which is handling the sale of The Body Shop on behalf of Brazillian cosmetic giant Natura & Co, has reached out to Apollo Global Management, CVC Capital Partners and Blackstone to drum up interest in a bid for the beauty retailer.
A source with an understanding of the talks said Morgan Stanley has approached “more than a dozen private equity firms in the City” on behalf of Natura but has yet to receive any concrete expressions of interest.
The deadline for the first round of non-binding bids for The Body Shop expired on September 11.
The source said potential bidders may be being put off by Natura’s valuation for a business it paid €1bn to buy from L’Oreal in 2017. They also wondered whether The Body Shop’s recent spell of poor trading and tough medium- and long-term economic outlooks might lead it to lower the asking price.
The source added: “It’s all gone very quiet, which is quite unusual, you would think that things would be heating up behind the scenes.
“[Natura] paid €1bn for the business. The business had been very profitable until last year – they only committed to invest £30m to improve the business back in 2017.
“Morgan Stanley is trying to get around £400m to £500m for a quick sale. Although with The Body Shop seeing difficult trading after Q2 results that number could be a lot less.”
Natura first announced it was “exploring strategy alternatives” for The Body Shop after the business reported an 11.6% drop in gross profits in the second quarter of 2023.
The Body Shop net sales also fell 12.5% in constant currency terms to £126.9m during the same period.
The Brazillian business finalised the sale of luxury brand Aesop in April, which it said would “strengthen its finances” and allow it to “focus on strategic priorities” – which it said at the time included building up The Body Shop.
This comes after it emerged over the weekend that Waterstones’ owner Elliott Advisors had been linked with a potential offer for The Body Shop.
Elliott owns Barnes & Noble and Waterstones and has backed fashion accessories chain Claire’s. It has recently made headlines for activist campaigns against the boards of some of the world’s biggest companies.
Morgan Stanley is understood to be looking to get a provisional agreement on a sale of The Body Shop finalised by the end of October.
Retail Week has approached Morgan Stanley for a comment.
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