From Breakingviews - Aesop deal spreads scent of stressed M&A
for about $2.5 billion. It offloaded the successful investment to shore up its balance sheet, an M&A motivation that probably will spread.
Natura secured a healthy multiple of nearly 24 times Aesop’s EBITDA last year. It speaks to the brand’s expanding appeal more than a decade since the owner of Avon International and The Body Shop paid nearly $50 million for a 65% stake and later bought the rest. By jettisoning its best business, however, boss Fábio Barbosa has made a difficult tradeoff. The incoming cash will lift a weight off management by helping pay down some of its 7.4 billion reais of net debt in the fourth quarter.
With recessions being anticipated in a higher interest rate environment, more companies are bound to consider a similar calculus. Although most corporate debt loads look manageable through next year, according to , pandemic-era borrowing maturing in 2025 and beyond could be a bigger strain. There will be no shortage of buyers sniffing around struggling companies with strong assets to sell.
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