Unilever Is in Talks to Acquire Jessica Alba's Honest Co.
September 15 2016 - 7:44PM
Dow Jones News
By Serena Ng and Sharon Terlep
Unilever PLC is in talks to acquire Honest Co., the
consumer-products retailer co-founded by actress Jessica Alba,
according to people familiar with the matter.
Unilever, maker of Dove soaps and Axe body sprays, is discussing
a deal valued at over $1 billion but significantly less than the
$1.7 billion valuation that was placed on Honest in a fundraising
round last year, the people said. The talks are at an early stage,
and Honest hasn't ruled out pursuing an initial public offering
instead, one of the people said.
Honest has raised more than $200 million from outside investors
since the Santa Monica, Calif., company's founding in 2011,
according to FactSet data. Those investors include venture-capital
firms General Catalyst Partners and Lightspeed Venture Partners as
well as money managers Fidelity Management & Research Co. and
Wellington Management Co. In the event of a sale, Honest has
pledged to pay some investors double their investment.
The company, which said it had revenue of $170 million in 2014,
sells disposable baby diapers, household cleaners, personal-care
and beauty products and has built a loyal following among young
mothers. Many consumers buy directly from its website via monthly
subscription services. Some items are also sold at brick-and-mortar
retailers including Target Corp. and Whole Foods Markets Inc.
Acquiring Honest would give Unilever a foothold in the
fast-growing market for "natural" or "green" cleaning products, as
well as the diaper business. Honest's business model could give
Unilever more insight into shopper behavior, but risks alienating
traditional retailers that carry its goods.
Unilever sells packaged food, household and personal-care
products globally, but in the U.S. it doesn't compete with Honest
in many product categories. It sold its North American laundry
detergent business for $1.45 billion to a private-equity firm in
2008, and in recent years has expanded in U.S. hair- and skin-care
products
Honest has challenged giants such as Procter & Gamble Co.
and Clorox Co. with promises to avoid harsh chemicals found in many
mainstream products. However, a Wall Street Journal investigation
earlier this year found Honest's laundry detergent contained sodium
lauryl sulfate, or SLS, one of the ingredients it pledged to avoid.
Honest disputed the findings of two independent lab tests and said
its own testing didn't find SLS.
For Unilever, an acquisition of Honest would be its second
recent purchase of a California e-commerce consumer products
company. In August, it paid $1 billion to acquire Dollar Shave
Club, a premium to the $615 million valuation that company fetched
a year earlier. The fast-growing but unprofitable startup provides
a mail-order service that ships disposable razors for a flat
monthly fee.
Write to Serena Ng at serena.ng@wsj.com and Sharon Terlep at
sharon.terlep@wsj.com
(END) Dow Jones Newswires
September 15, 2016 19:29 ET (23:29 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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