Jessica Alba is reportedly planning on selling The Honest Company. P&G is one of the companies rumored to be eyeing the brand.
According to WWD, the company has hired Morgan Stanley and Goldman, Sachs & Co. to explore an IPO. Also, The Honest Company is believed to be considering an M&A transaction, as per sources statements.
The publication noted that the shift is logical due to the stock market's unpredictability. However, other financial experts claim that the company may still decide to float their shares.
"Given the scale of the company and the volatility in the capital markets, my guess would be a deal would probably be more attractive than the IPO," managing director at SHM Corporate Navigators Martin Okner said. "Usually a strategic buyer who sees synergies and the ability to really grow distribution or new product can pay a premium," Andrea Weiss, founding partner at The O-Alliance, added.
Potential buyers of the brand are said to be Procter & Gamble, Johnson & Johnson, Kimberly Clark, Unilever, Colgate and L'Oreal. The one that successfully acquires the company would definitely boost buyer points for the business.
Jessica Alba's Honest Company has about $222 million in venture capital backing. Last year, the brand was valued at around $1.7 billion.
The company branched out with Honest Beauty in 2015. The line was launched in Ulta stores in February.
"The IPO route is still the more likely scenario, assuming the equity markets are there to support it, and there has not been a slowdown in performance as a result of recent events," Ilya Seglin, managing director at Threadstone Advisors, said. "M&A negotiations will get more complicated around discussions related to current and any future legal liabilities."
Cincinnati Business Courier reported that a P&G spokesperson has announced that the company does not usually announce its acquisition strategy. P&G is known for its cleaning agents as well as personal care products.
