Goldman eyes £600m Body Shop bid as L'Oreal eyes cosmetic change

The merchant banking arm of Goldman Sachs (NYSE: GS-PB - news) is weighing a £600m bid for The Body Shop, the high street chain that has been put up for sale by L'Oreal, its French owner.

Sky News understands that Goldman is examining whether to submit an initial bid for the chain ahead of an initial deadline on Friday.

If it decides to proceed, it will pitch Goldman into a broad auction including private equity firms such as Advent International, Apax Partners, Carlyle and CVC Capital Partners.

L'Oreal's decision to offload the chain founded by the late Anita Roddick and her husband Gordon in 1976 has sparked a wide array of interest in the business.

Sources close to the process, however, have described the initial price-tag of Euros 1bn (£850m) as "wildly optimistic" and suggested that it may be worth just £600m - or even less.

The Body Shop, which has prided itself on ethical credentials since it was founded, has endured a lacklustre period since L'Oreal bought it for £650m in 2006.

Sales last year fell by about 5% at its 3000 stores in 66 countries around the world.

A number of private equity bidders have been courting executives to lead their offers, with Lazard (Frankfurt: A0DQP8 - news) handling the sale on behalf of L'Oreal.

Advent is working with Richard Baker, the former boss of Boots, who is one of the firm's existing operating partners, as well as an unnamed former Body Shop executive.

CVC (Taiwan OTC: 4744.TWO - news) has enlisted Emmanuel Osti, a former boss of L'Occitane, the French cosmetics brand.

A spokesman for Goldman declined to comment on Monday.