Natura & Co. to sell Aesop to L’Oréal for $2.5 billion

In the end it was an offer that was too good for Natura CEO Fábio Barbosa to refuse. The world’s number one cosmetics company, L’Oréal, has agreed to pay Natura $2.525 billion for Aesop, its biggest ever outlay on a brand. The French group, owner of the Garnier and Maybelline brands, beat off competition for Aesop from compatriot LVMH and Japanese cosmetics giant Shiseido. The deal is expected to close in Q3 2023.

It’s not the first time the Brazilian company has done business with L’Oréal. In 2017, less than a year after it acquired 100% of Aesop from its Australian owners, Natura bought The Body Shop from L’Oréal in a €1 billion deal. In 2019, Natura purchased the UK cosmetics royalty, Avon, for $2 billion, and this latest deal will give Natura the financial muscle to develop the above companies, as Barbosa explained: “With a strengthened financial structure and a deleveraged balance sheet, Natura & Co, exercising strict financial discipline, will be able to sharpen its focus on its strategic priorities, notably our investment plan in Latin America.” In 2021, Natura issued $1 billion in sustainability bonds in order to service the company’s debts.

Barbosa and his fellow directors will likely have mixed feelings about the sale of Aesop. The B Corp certified company, known for its vegan ingredients, has a cult following and was the only company in the Natura stable to post growth on 2022, yet the inflation crisis and Western sanctions on Russia – a big market for Avon products – have hit Natura revenues hard, forcing the company's hand.

News of the deal with L’Oréal led to a 2.8% increase in Natura’s share price on Tuesday to $5.4 per share.