BODY SHOP TO DEAL FOR U.S. UNIT
Byline: James Fallon
LONDON — The Body Shop International PLC decided Monday that it wanted all of America for itself after all.
The struggling beauty retailer said it has entered a preliminary agreement to buy Body Shop International USA Inc., the holding company for its American joint venture partner Bellamy Retail Group, for $12.1 million in shares and cash.
The decision ends weeks of speculation as to whether Adrian Bellamy, head of Body Shop’s U.S. operations, would exercise his right to buy up to 51 percent of the American subsidiary. Bellamy could exercise the option between the years 2000 and 2002 and has been in talks with Body Shop about it since May. The agreement Monday will ensure Body Shop will retain full ownership of its U.S. business, which has been one of the stronger performers in the group over the last two years.
Bellamy will remain head of the company’s U.S. business but also will become more widely involved in the overall group. Body Shop has signed a two-year consultancy agreement with him under which he will be paid $1 million annually.
“The purchase of Bellamy Retail Group is a very positive development for The Body Shop,” Patrick Gournay, the company’s chief executive, said in a statement. “By retaining full ownership of our U.S. business, we will gain the full benefit of a major market opportunity. This transaction also allows us to leverage Adrian Bellamy’s retail expertise for the benefit of the entire group.”
Gournay said Body Shop has significant potential to grow its business in the U.S., where it currently has more than 285 stores. The company plans to expand its American business by opening more stores, broadening its Body Shop Direct subsidiary and through e-commerce.
Body Shop entered into a joint venture with Bellamy in June 1998 when its U.S. operations had operating losses of $13.1 million. The American subsidiary had operating profits of $5.1 million in the 53 weeks ending March 3. Net assets totaled $57.4 million at that time.
If the deal is approved by Body Shop’s shareholders at a special meeting Aug. 9, Body Shop will issue 7.5 million new shares to Bellamy, representing 3.7 percent of the company’s enlarged share capital. The shares are worth about $11.1 million. In addition, Bellamy will receive $1 million in cash, which is the amount he paid for the option on the U.S. business three years ago.
Bellamy has entered into a seven-year agreement with Anita and Gordon Roddick, Body Shop’s founders, giving them right of first refusal on his shares.
Body Shop’s shares rose 4.2 percent Monday on the London Stock Exchange to close at $1.40, compared with $1.35 on Friday.