Body Shop sale moves closer as L'Oreal talks to Natura

French cosmetics group L'Oreal has begun "exclusive" talks with Brazilian make-up company Natura Cosmeticos over the sale of its Body Shop business.

L'Oreal said that Natura had made a "firm" offer valuing the company at 1bn euros (£880m).

Earlier this year, L'Oreal said it was reviewing its strategy for the chain, which it bought for £652m in 2006.

The Body Shop was set up by Anita Roddick who promoted ethical beauty products.

But in recent years it has suffered from increased competition from newcomers also offering products based on natural ingredients and no animal testing.

L'Oreal chairman and chief executive, Jean-Paul Agon said: "I am very pleased to announce Natura as the potential new "home" for the Body Shop.

"It is the best new owner we could imagine to nurture the brand DNA around naturality and ethics."

The chairman and chief executive of the Body Shop, Jeremy Schwartz said the ethical values and expertise of Natura made it 'the perfect new owner' of The Body Shop and would help it to rejuvenate the brand.

Private equity group CVC and China's Fosun also made bids for the struggling business.

Last year, the Body Shop's sales fell 4.8% and its profit margin dropped to 3.7%, far below the double-digit margins achieved by L'Oreal's other brands.

Natura Cosmeticos is at the forefront of the Brazilian beauty market and operates in seven South American countries and France.