Brazilian cosmetics giant sells The Body Shop for $254 million

WEB DESK: Brazilian cosmetics manufacturer Natura &Co announced on Tuesday that it has entered into a binding agreement to sell its subsidiary, The Body Shop, to private investor Aurelius Group.

The deal has an enterprise value of 207 million UK pounds ($254.32 million). This marks Natura’s second major divestment this year as part of a broader organisational restructuring.

In April, the company announced the sale of luxury brand Aesop to L’Oreal for an enterprise value of $2.53 billion.

Following the news, shares of Natura surged by as much as 8 percent in Sao Paulo morning trading, positioning it as one of the top performers on Brazil’s benchmark stock index, Bovespa, which saw an increase of nearly 2 per cent.

The agreement with Aurelius Group includes a potential earn-out of 90 million pounds. Natura stated that both the sale price and the earn-out would be paid within five years of the transaction closing, expected by year-end.

Natura &Co’s Chief Executive, Fabio Barbosa, highlighted the sale of The Body Shop as “another important step in Natura& Co’s new development cycle to unlock significant value.”

He emphasised that the company, now refocused, deleveraged, and leaner, can fully concentrate on its core relationship-selling expertise in Latin America and continue optimising Avon International’s footprint.

In August, Natura announced its board’s authorization to explore “strategic alternatives” for The Body Shop, including a potential sale, six years after acquiring it from L’Oreal. Exclusive talks with Aurelius began last month.

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Analysts from JPMorgan, led by Joseph Giordano, viewed the announcement positively, considering The Body Shop’s valuation as “good.”

They noted that the potential value exceeded their estimated range of $200–300 million and anticipated that the proceeds could lead to extraordinary dividends.

Natura experienced rapid growth through high-profile acquisitions, including The Body Shop, Aesop, and Avon International, in recent years.

However, profitability challenges led the company to embark on a quest for “discipline” and deleveraging last year to return to profit.

In the third quarter, Natura &Co reported a net profit of 7 billion reais ($1.43 billion), rebounding from a 560 million-real loss a year earlier, with the sale of Aesop significantly contributing to this positive outcome.

Without the divestiture, Natura stated that its third-quarter net profit would have been 745 million reais.