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Body Shop Accepts L’Oreal Takeover

By Staff -- Gifts and Dec, 3/21/2006 11:24:00 AM

London — The Body Shop chain of natural bath and body product stores accepted a $1.1 billion takeover offer from French company L’Oreal, the world’s largest cosmetics group.

L’Oreal’s offer was $5.27 per share, or about 34 percent higher than Body Shop’s share price before speculation about a possible takeover drove it up last month (see complete coverage at http://www.giftsanddec.com/article/CA6310249.html). As a result of the bid, Body Shop shares rose 10 percent, to about $5.20, on the London Stock Exchange.

Under the terms of the deal, The Body Shop will retain its separate identity and current management, and no store closures or layoffs are planned. Body Shop chairman Adrian Bellamy will net about $39 million, and chief executive Peter Saunders will make almost $14 million. Both are planning to stay with the company.

However, founders Dame Anita and Gordon Roddick have come in for criticism by activists for selling a brand long known for ethical sourcing to a company that still tests its products on animals. The Ethical Consumer magazine and Naturewatch have even called for a boycott, though L’Oreal chairman and CEO Lindsay Owen-Jones said the company has a long term plan for “joining Body Shop on the issue.”

The Roddicks, who gave up managing The Body Shop in 2002, stand to make about $204 million for their 18 percent share of the business. Dame Anita, who will stay on as a consultant, said she was convinced by Sir Lindsay's promise to “ring fence” Body Shop, and by his offer to let her “teach L'Oreal about community trading.” Dame Anita also said that she would share proceeds from the sale with Amnesty International and other “social justice charities.”

The Roddicks have another 2 percent of the business held in charitable trusts, and their sleeping partner Ian McGlinn owns 21 percent, from which he stands to make about $240 million.

The Body Shop brings more than 2,000 retail outlets to L’Oreal, which already owns Maybelline, Garnier, Redken and 15 other brands. Body Shop produced revenues of more than $735 million last year.

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