Report: Natura working with Bank of America and Morgan Stanley on sale of shares for Aesop unit

Cosmetics maker Natura &Co is working with Bank of America Corp. and Morgan Stanley to sell a stake in its Aesop unit, according to people familiar with the matter.

Aesop, the Brazilian company’s premium brand, has attracted interest from private equity firm CVC Capital Partners and rivals such as L’Occitane International SA and Shiseido Co., said the people, who asked not to be identified as the discussions are private.

Natura had previously favored an IPO over Aesop but is now leaning towards a minority stake sale due to unfavorable stock markets, the sources said.

Talks are in their early stages and could end without a deal, the people said.

Natura, Bank of America, Morgan Stanley and CVC declined to comment. Representatives for L’Occitane and Shiseido did not immediately respond to requests for comment. Interest in Aesop was reported earlier by the Daily mail.

Banco BTG Pactual SA analyst Luiz Guanais estimated last month that Aesop could be worth around 9 billion reais ($1.7 billion), given the average multiple of global cosmetics players of around 15. times the 2022 ratio of enterprise value to earnings before interest, taxes, depreciation and amortization.

Aesop recorded revenue of nearly 603 million reais for the third quarter, representing approximately 7% of Natura’s total net revenue.

Sao Paulo-based Natura said Oct. 18 it was evaluating options to unlock value at Aesop, including a possible IPO or spin-off, as the company seeks to restore investor confidence. The announcement, part of a broader overhaul orchestrated by Fabio Barbosa, who took over as chief executive this year, prompted JPMorgan Chase & Co. to move Natura shares from neutral to overweight.

Natura posted net sales of 9 billion reais in the third quarter, below analysts’ estimates of 9.29 billion reais.

The company’s shares continued to decline and remain down 55% for the year, leaving the company with a market value of around 16 billion reais. Natura’s U.S. certificates of deposit rose 3.9% in late trading Tuesday in New York.

By Cristiane Lucchesi, Ruth David and Vinícius Andrade, with help from Crystal Tse.

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