Body Shop admits talks on buy-back

Private plans: Analysts confused over Anita and Gordon Roddick's reported move to regain control

NIGEL COPE

Body Shop International, the environmentally conscious retail group, admitted last night that it has held talks with founders Anita and Gordon Roddick over a plan by them to take the company back into private ownership.

However, the board said the Roddicks had made it clear that no such proposal by them is expected to be made in the near future, if at all.

One retail analyst said last night: "It's a bit of a mess. It seems the Roddicks have expressed an interest and then backed off." The Roddicks, who own 24 per cent of the group, were believed to be in advanced talks with bankers to raise funds for a bid that would give them back control. The move would have created a company able to make more donations to charitable causes.

Morgan Stanley, the investment bank which is advising the Roddicks, declined to comment yesterday. However, it is understood that the Roddicks were prepared to offer less than 200p compared with yesterday's closing price of 156p, up 21p. An offer at 175p would value the company at pounds 332m.

The offer was due to be launched two weeks ago along with the company's interim results but was delayed by problems raising sufficient funding.

Body Shop issued a statement yesterday saying it had not received a proposal from the Roddicks to take the company private. It said the Roddicks had advised the board that no such proposal by them is expected to be made in the future, if at all.

However, the company admitted that preliminary discussions on a share buy-back had taken place.

The company's handling of the Roddick proposal met with an angry reaction in the City, which criticised the group for failing to supply investors with sufficient information.

One institutional investor said: "It is not very satisfactory and we are not very happy. We have so far heard nothing from the company but are expecting to be contacted today. We do not feel shareholders have sufficient information to make an informed judgement."

The speculation also surprised City analysts, who felt that Body Shop was adapting to life as a public company. It has appointed new non-executive directors and made other management changes.

The speculation over the future ownership of the company comes at an awkward time for the group. It has been experiencing difficult trading in the US due to fierce competition. Last month Body Shop announced a 26 per cent drop in profits to pounds 9m in the six months to August. The US business slumped into a pounds 2.4m loss. John Richards, stores analyst at NatWest Securities, said: "If this time next year the American business is still causing problems then this could mean store closures and write-offs. That would make 175p appear quite a good offer. But if the performance there does not improve then it might look cheap."

Two other companies also announced plans to return to the private sector yesterday. Le Creuset, the manufacturer of upmarket saucepans, said the chairman, Paul van Zuydam, was seeking funding to buy out the interest of minority shareholders. Mr van Zuydam already controls 74 per cent of the company.

Explaining its decision the company said it did not feel it had derived any benefits from its USM listing since 1989. With the USM set to disappear by the end of next year, the board had decided its interest would not be best served by moving up to the main market or by listing on the new alternative investment market.

Frank G Gates, the car dealership, said it was considering returning the company to private control.

Comment, page 21

From private to public and back again

Succeeded

Virgin (Richard Branson) Buy-back price 140p in 1988. Float price 140p in 1986. Branson claimed City undervalued the company

Really Useful Group (Andrew Lloyd-Webber) Buy-back price 233p in 1990 - more than double 1986 float price

Failed

Amstrad (Alan Sugar) Buy-back price 30p in 1992. Price now 291.5p

Chrysalis Records (Chris Wright) Buy back failed. Sold to Thorn-EMI for pounds 63m in 1991

Telegraph Group (Conrad Black) Buy-back price 460p in 1995. Price now 411p

Pending

Body Shop (Anita Roddick) Estimated buy-back price 200p.Price now 156p

Le Creuset(Paul van Zuydam) Buy-back price not decided. Current price 177p