By  on September 28, 2007

No place brews juicier gossip than a trade show.

Enter the Natural Products Expo in Baltimore, the place to be to find out the latest on Burt's Bees, the personal care company that is reportedly up for sale.

On Thursday, talk at the show focused on the recent news that investment firm AEA Investors is shopping the brand it bought in 2003, first reported earlier this week by thedeal.com. Speaking from the show, Mike Indursky, Burt's Bees' chief marketing and strategic officer, confirmed the news, explaining "[AEA] will periodically look at each investment and decide the future" of it. "This process could go on indefinitely," he added. "You never know if or when there will be a transaction. We just don't get involved in it."

Industry experts expect the Morrisville, N.C.-based maker of lotions and shampoo to attract as much as $500 million.

High price tags don't deter offers, said Paddy Spence, chief executive officer of Nature's Gate of Chatsworth, Calif.

"These brands were started by entrepreneurs that saw a need in the marketplace. They built a grassroots connection with consumers. You can't re-create that overnight no matter how much you know. You can't build authenticity in a lab," Spence said from the show floor of the Natural Products Expo.

Also at the show was Jeffrey Light, founder of Jason Natural Products, which was bought by the Hain Celestial Group in 2004. Light, who now heads up business coaching firm Better Business Builders, said the average buying price for a natural company is 12 times EBITDA, "high for a beauty company but on par with the natural market." He estimated Burt's Bees would likely fetch $350 million.

Sources at the show said that while Burt's Bees is a very attractive brand, it may be a better fit for a personal care company, such as Unilever or Kao, than a cosmetics firm, such as L'Oréal.

"This is a drugstore line that appeals mainly to the college campus crowd. A 40-year-old consumer is looking for something prettier and more fun to talk about. She might be interested in a Burt's Bees lip balm but not one of their treatment items. The brand skews a little young and to the less sophisticated. I don't see how a cosmetics firm would be able to leverage it over the years," said one source.The most attractive quality of the brand, Light and Spence agreed, could lie in its global appeal, which is still just getting off the ground. AEA purchased 80 percent of Burt's Bees four years ago for more than $175 million. According to data from Information Resources Inc., sales of Burt's Bees products are in the $100 million range for the latest 52-week period in food, drug and mass stores — the brand is not sold in Wal-Mart. Overall company sales for 2006 were $250 million, according to Indursky. Burt's Bees products are also sold in college bookstores and gift boutiques and in select regions across the world, including the United Kingdom. This month Burt's Bees opened its first international office in Marlow, Buckinghamshire, to take over distribution of the brand there

The natural care company has grown rapidly in the U.S. over the past two years by rolling out $10 million-a-year ad campaigns, relaunching its Web site, burtsbees.com, and landing key drugstore accounts Walgreens and CVS. Also helping keep the brand relevant and in the spotlight is Burt's Bees' Indursky, a former L'Oréal executive. Indursky is known as one the most passionate lobbyers for a natural standard in the beauty industry and this summer he announced plans to lead the effort himself, bringing along other interested manufacturers.

Big beauty firms continue to seek ways to form closer ties with natural beauty companies. L'Oréal paid $1.4 billion for The Body Shop in March 2006, a natural products retailer, and also acquired French organic beauty manufacturer Laboratoire Sanoflore for an undisclosed sum in 2006. Hain Celestial acquired Alba Botanica and Avalon Organics from North Castle in January for $120 million; both brands generated combined sales of more than $40 million in the most recent fiscal year. And in 2006, 84 percent of Tom's of Maine was bought by Colgate-Palmolive Co. for $100 million.

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