Body Shop faces possible takeover from L'Oreal

Body Shop shares rose more than 10% after media reports named L'Oreal as a possible bidder.

In a statement, the L'Oreal company said: "L'Oreal's management is continually evaluating a wide range of strategic alternatives that may add value to its shareholders, including a possible offer for Body Shop."

Dame Anita Roddick, who founded the Body Shop 30 years ago, styled the brand as an ethical alternative, specialising in natural products and opposed to animal testing. She stepped down from management in 2002 but has retained an 18% stake in the company.

If a deal goes ahead, there are concerns about how Body Shop's image as a corporate good guy will be affected. L'Oreal has previously come under fire for animal testing from animal rights charity Peta and the company is also part-owned by Nestle, which was condemned by Oxfam for its business practices in Ethiopia.

Anita Singh of Peta said: "Big companies are learning that consumers care about compassionate cosmetics. We hope Body Shop convinces L'Oreal to adopt more ethical standards."

L'Oreal's move on Body Shop mirrors a recent trend for multinationals to snap up small, ethical brands, such as Cadbury Schweppes' takeover of Green & Black's, including the world's first Fair Trade chocolate bar, Maya Gold.

However, Roddick has been highly critical of L'Oreal's ethical practices in the past. A section of her website headed 'Because You're Not Worth It' sees her rail against the global cosmetics company.

As one of the Body Shop's single biggest shareholder, Roddick's reaction to any proposed take over will be decisive.

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