Natura gains on exclusive talks for sale of The Body Shop

Any transaction would value The Body Shop at a “substantially lower” price than £400 million to £500 million

Natura & Co. climbed after the Brazilian beauty company confirmed it’s in exclusive talks with Aurelius Investment Advisory Limited for the sale of UK-based cosmetics chain The Body Shop.

Shares of the Sao Paulo-based company gained as much as 3.8% as of 10:40 a.m. local time following a filing with Brazil’s securities commission Monday. The private equity firm staved off competition from rival bidders including Alteri Investors and Elliott Advisors, according to Sky News, which first reported the talks on Sunday. A potential deal is expected to be signed in November, the report said.

Natura and Aurelius are still negotiating terms, and there is “no assurance” the transaction will be completed, according to the filing.

Any transaction would value The Body Shop at a “substantially lower” price than £400 million to £500 million mentioned in other reports, the news outlet said.

In August, Natura gave its board the green light to begin exploring a sale of The Body Shop in a bid to cut costs. The Sao Paulo-based company acquired the British retailer from L’Oreal SA about six years ago.

“The news is positive given the timing,” nearly two months after Natura confirmed its intention to sell The Body Shop, Citi analyst João Pedro Soares wrote in a note to clients Monday. The deal “also underscores management’s willingness to discontinue non-core assets rapidly, which is also good.”

The move comes as Natura is shifting its focus back to core Latin America markets after a challenging period brought on by the pandemic. In April, the company sold its luxury cosmetics brand Aesop to L’Oreal, helping ease concerns over its leverage metrics.