TORONTO — The Body Shop Canada is due to be sold to a company led by the co-founder of frozen yogurt chain Yogen Früz.
The cosmetics and skincare retailer says in court filings that an agreement it signed on Dec. 6 will see it sell all of its assets to an affiliate of Serruya Private Equity Inc.
The affiliate is run by Markham, Ont.-based businessman Michael Serruya, whose private equity firm has also invested in St. Louis Bar and Grill, Second Cup Coffee Co., Swensen's and Yogurty's.
The price Serruya's firm will pay for The Body Shop Canada was redacted from court documents but includes both cash and the assumption of certain liabilities. Those documents say The Body Shop Canada’s creditors are owed between $11.5 million and $12.5 million to its creditors.
Serruya Private Equity, Michael Serruya and lawyers for The Body Shop Canada did not immediately respond to a request for comment on the deal, which is due to close on Monday.
The deal signals a new chapter for the beleaguered bath and beauty products chain's Canadian arm, which has been in operation for 44 years but has experienced a rocky last year.
In March, it closed 33 stores and filed for credit protection, saying its parent company, European private equity firm Aurelius, had allegedly stripped it of cash and pushed it into debt.
Some 72 locations remained open and even saw a surge in sales, when the creditor protection proceedings were publicized, but it was hard for the company to cope with the interest because its U.K. counterpart controlled its inventory and their finances were intertwined.
By April, the Canadian business was searching for a lifeline. Jordan Searle, the head of The Body Shop Canada, said in an affidavit that month that he had seen a "sufficient level of interest" in the Canadian business to believe the company should pursue a sale.
In July, an Ontario judge authorized a sales process, which would occur at the same time as the company's U.K. business was also seeking a buyer.
Bidders in the Canadian sales process had until Oct. 8 to make an offer for the company. Four bids were filed, court records say.
The process was complicated by the fact that anyone operating The Body Shop Canada needed to also reach an agreement with the purchaser of the company's U.K. business, which owns the brand's intellectual property and would be the source of inventory for the Canadian operations
That purchaser wound up being a consortium led by French investment firm Aurea Group, which told The Body Shop Canada in September that it would prefer to continue the Canadian business through a franchise arrangement rather than a corporate subsidiary or a joint venture, said an affidavit from Searle.
Court documents said Serruya intends to enter into a franchise agreement with the Aurea consortium prior to taking ownership of The Body Shop Canada.
The Body Shop was the brainchild of the late environmental activist Anita Roddick, who wanted to create beauty and skincare products not tested on animals and developed through fair relationships with farmers and suppliers.
Roddick first brought her idea to life with a store in Brighton, a seaside town south of London, in 1976 but the concept quickly took off and eventually had a series of international owners.
It was acquired in 2006 for 652 million pounds ($1.1 billion) by beauty giant L’Oréal, which later sold the company to Natura, the Brazil-based owner of Avon, in 2017 for one billion euros ($1.4 billion). Natura sold the firm to Aurelius.
This report by The Canadian Press was first published Dec. 11, 2024.
Tara Deschamps, The Canadian Press
