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Mergers, Acquisitions, Alliances and Synergies Case Study
Case Title:
The Body Shop (Part B): L’Oréal Turning Green?
Publication Year : 2006
Authors: Vasudha.A
Industry: Personal Care Products
Region: US
Case Code: MAA0079C
Teaching Note: Available
Structured Assignment: Not Available
OR
Abstract:
On 17 March 2006, L’Oréal the world’s largest and most successful cosmetic company, announced its take over of the Body Shop, the ethical cosmetic retailer in the UK, founded by Anita Roddick.
Under the leadership of CEO Lindsay Owen-Jones, since 1988, L’Oréal grew at a phenomenal growth rate and by 2004 achieved 19 years of consecutive double digit growth. By 2005, most of its brands are facing stagnating sales in its major markets. The Asian markets, Brazil, China and Russia are the only drivers of growth. In most of these emerging markets L’Oréal’s brands are not in the affordable range for the middle class consumers. Threat from competitors such as Unilever, P&G, Beiersdorf and Henkel as well as complacency within the organisation since it has reached number one position are the major hurdles faced by the company in the twenty-first century.
When news of this take over got out, the Body Shop faced severe criticism and public outrage on having sold out to a company which conducted animal testing and had not shown commitment to any ethical issues. Body Shop’s ethical rating by the Ethical Consumer Magazine dipped from 11 out of 20 to 2.5. 24% of L’Oréal was controlled by Nestlé. Consumers felt that this was a case of selling to the devil and a farewell to the values that the Body Shop had espoused thus far.
The deep pockets and global reach of L’Oréal were expected to improve the Body Shop’s performance in terms of more efficient manufacturing and marketing know how. The Body Shop was to provide the giant a new perspective into retailing, a foothold in the masstige markets and an ethical platform.
Was Anita’s decision right for her company? Will the takeover result in the expected synergies?
Pedagogical Objectives:
- To discuss about L’Oréal’s intentions in taking over the Body Shop
- To highlight the ways in which L’ Oreal and Body Shop dealt with ethical issues.
Keywords : Mergers,Acquisitions,Alliances Case Study;L’ Oreal; Ethical Marketing; Corporate Social Responsibility; Lindsay Owen Jones; The Body Shop; Personal Care Products; Masstige brand; Community Trade; Ethical Cosmetic Retailer; Beauty Care Market; Acquisitions; Global Branding; Animal Testing; Emerging Markets; Market Leader
