The Body Shop

Natura is upping its global presence through its acquisition of The Body Shop.

“Throughout the world, the brand needs some rejuvenating, but it has very high brand awareness,” said Robert Chatwin, vice president of new business on a business call to discuss the acquisition Monday. The deal, under which Natura will pay $1.1 billion to take over the business from L’Oréal, was unveiled Friday.

After the deal closes, 50 percent of Natura’s business will be outside of Brazil, its home territory, Chatwin said. Natura will need to execute turnarounds in about 25 percent of Body Shop markets, executives said.

He singled out China as an area of potential expansion for all three of the Natura businesses — Natura Brasil, Aesop and soon The Body Shop — saying that there are many cities in China where the brands could expand, and that Latin America also presents an opportunity for growth.

“We do have a plan at the country level, at the store level,” Chatwin said. “There is no country with too many stores. We do believe that the Body Shop could be in 150 cities, it’s almost at 100…The remaining 50, 42 are in China — we have the animal testing hurdle in China, both Aesop and Natura…China’s a potential market for all three brands.”

Natura is taking on additional debt to do the deal, but should be back at a 1.3 times debt to EBITDA ratio in four years, executives said. The business is also expecting all three better-for-you personal-care businesses to have a significant amount of synergies. Executives also noted that Body Shop founder Anita Roddick had been to visit Natura multiple times.

“We use natural ingredients that are sustainably sourced, there’s a strong synergy there,” Chatwin said. “Formulation, research, preparations — there’s great synergy. We were surprised with the synergy in skin care…we are strong in fragrances, of course, both companies will help to benefit from each other. Let’s not forget about Aesop, which is very strong in skin care and body care. It’s only natural to have more synergies in that area.”

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