The French beauty giant, confirming weeks of speculation, announced Friday that it will make a cash bid to acquire the British ethical manufacturer and retailer. It will offer 300 pence per share, or $5.27 at current exchange, valuing the company at 652 million pounds, or $1.14 billion.
"A partnership between our companies makes perfect sense," L'Oréal chairman and chief executive officer Lindsay Owen-Jones said in a statement. "Combining L'Oréal's expertise and knowledge of international markets with The Body Shop's distinct culture and values will benefit both companies.
"We are delighted that The Body Shop's board has agreed to unanimously recommend our offer to the company's shareholders. We look forward to working together with The Body Shop's management, employees and franchises to fulfill The Body Shop's independent potential as part of the L'Oréal family."
L'Oréal indicated it was interested in The Body Shop in late February, but at that time said it had not approached the company about an acquisition.
L'Oréal has received a commitment from The Body Shop founders Anita and Gordon Roddick, who hold about an 18 percent stake in the company, and from the firm's directors, who hold 3.6 percent, to accept the offer. There is also a call option, or the right to buy shares at a predetermined price, on Ian McGlinn's 21 percent holding. McGlinn lent the Roddicks the money to start The Body Shop in 1976.
The L'Oréal family, which includes brands Lancôme, L'Oréal Paris, Maybelline and Giorgio Armani cosmetics, will be adopting something of a wild child. Fronted by outspoken Anita Roddick, The Body Shop has long rebelled against the corporate mentality epitomized by multinational conglomerates such as Paris-based L'Oréal. Roddick, however, is giving the deal her backing and will act as a consultant for The Body Shop and advise L'Oréal on community trade issues.
"It's not selling out," Roddick said at a London press conference. "And the assumption that I am sitting next to an enemy is one that is absolutely wrong."
"We wouldn't be here today if Anita had not said yes," Owen-Jones said at the conference. "For all Body Shop customers, the first thing they want to know is if Anita is going to stay." Owen-Jones said he has always admired the businesswoman. "Though sometimes she's said things to hurt me," he added.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"