Body Shop International PLC, the British retailer that promotes natural-based cosmetics, said Friday it has agreed to be taken over by L'Oreal SA of France in a cash deal worth 652 million pounds ($1.14 billion).
Body Shop will retain its separate identity and current management, the companies said.
"A partnership between our companies makes perfect sense," said L'Oreal Chairman and CEO Lindsay Owen-Jones. "Combining L'Oreal's expertise and knowledge of international markets with The Body Shop's distinct culture and values will benefit both companies."
Body Shop was founded 30 years ago in Brighton, England, by Anita and Gordon Roddick, and there are now more than 2,000 stores around the world. The Roddicks stepped down from managing the company in 2002, but have remained as non-executive directors and stand to bank around 117 million pounds ($204 million) from their 18 percent stake.
Anita Roddick, who will retain her current role as a consultant, said the company's values would not change.
"I don't see it as selling out," she said. "L'Oreal has displayed visionary leadership in wanting to be an authentic advocate and supporter of our values."
L'Oreal, which makes Maybelline mascara, Lancome skin cream and Armani and Ralph Lauren fragrances, is paying 300 pence ($5.25) per share for Body Shop, a premium of 34.2 percent over the share price on Feb. 21, the day before takeover speculation appeared in the media.
Body Shop's shares rose 10.2 percent to 295.25 pence ($5.16) on the London Stock Exchange. L'Oreal shares gained 0.5 percent to 75 euros ($90.67) in Paris.
The Body Shop has in recent years moved toward the luxury end of the cosmetics market to avoid direct competition with supermarket and drugstore mass merchandisers such as Tesco PLC in Britain and Wal-Mart Stores Inc. in the United States.
The offer is conditional upon required regulatory clearances. L'Oreal said it expects the acquisition to help earnings per share after Dec. 31.