Body Shop seeks immortality

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The Independent Online
NO ONE would claim that the Body Shop's exotic anti-wrinkle cream stops ageing forever, but behind Anita and Gordon Roddick's plans to take the company private lies an ambitious bid for immortality.

The proposals, leaked prematurely to the press last week, aim to create a charitable trust into which the founders will gift the green cosmetics chain after buying out other investors.

Anita Roddick, now 53, has long grown tired of the City treadmill, of the "pinstripe dinosaurs", since floating on the stock market back in 1984. But the plans, insiders say, are aimed at preserving the Body Shop's green ethos and protecting it from takeover long after the Roddicks have gone. The goal is a kind of Rockefeller or Ford foundation. "What they're trying to do is preserve the good work beyond their deaths," a source close to Body Shop said.

Before then, for all the frustration, there are serious financial mountains to climb before dream becomes reality.

Body Shop is angry at the leak and has asked the Takeover Panel to investigate. If caught - and there are firm suspects - all the bid watchdog could do is issue a public rap on the knuckles, a Panel spokesman said.

After a leap to 156p, Body Shop shares closed on Friday at 136p as the Body Shop dampened speculation of an imminent deal. That values the 1,200- shop chain at pounds 258m, though adviser Morgan Stanley was working around a 175p offer, worth pounds 332m.

The Roddicks own a 24 per cent stake and long-time backer Ian McGlinn is prepared to swap his 28 per cent for loan stock, leaving 48 per cent - or pounds 159m - to be bought out.

Body Shop sources say bankers are still working on a mixture of senior (secured loans) and mezzanine debt to finance a bid.

Usually "mezzanine" is a hybrid of equity and debt, carrying greater risk and greater reward via share subscription rights. Mezzanine finance is suited to management buyouts, where the aim is sale or flotation, but the Roddicks' charity plan cannot offer such incentives.

That still leaves advisers now toying with structures that would enable Body Shop to pay off loans in what are still tough trading conditions.

Though the shares are far from their 1990 high of 350p, original investors have still done well from the company's pounds 5m flotation.

None more so than former garage owner McGlinn, whose pounds 4,000 investment in 1976 is worth pounds 72m today.

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