Actress Jessica Alba’s Honest Co. is in early talks with Unilever about an acquisition valued at more than $1 billion, the Wall Street Journal reports. The amount is “significantly less than the $1.7 billion valuation that was placed on Honest in a fundraising round last year,” its sources say, and Honest may yet opt for an IPO. It is based in Santa Monica, Calif.
“Acquiring Honest would give Unilever a foothold in the fast-growing market for ‘natural’ or ‘green’ cleaning products, as well as the diaper business,” write Serena Ng and Sharon Terlep. “Honest’s business model could give Unilever more insight into shopper behavior, but risks alienating traditional retailers that carry its goods.”
This news “follows an earlier report from Recode suggesting Honest was talking to either Unilever or Procter & Gamble,” points out Lindsay Blakely for Inc., suggesting that Honest was testing the waters for all options. “Honest declined to comment on the reports. Last week, Unilever declined a request from Inc. to comment on the Recode story.”
“Alba co-founded Honest Co. in 2012 following a desire to create ‘a trustworthy lifestyle brand that touched everything in your home, that was nontoxic and affordable and convenient to get,’” Abid Rahman and Paul Bon recount in The Hollywood Reporter. “Besides Alba, equity stakeholders in Honest include General Catalyst Partners, Lightspeed Venture Partners, Fidelity Management & Research and Wellington Management.”
Alba’s partner, attorney Brian Lee, has also co-founded LegalZoom and ShoeDazzle,” CNNMoney’s Parija Kavilanz reports. “Brian Lee is a hustler. And he knows how to harness the power of a celebrity name,” Kavilanz writes.
“Aimed primarily at young mothers, like Alba herself, Honest sells disposable baby diapers, household cleaners, personal-care and beauty products,” writes Debbie Emery on The Wrap. Alba, 36, “shot to stardom with her role on TV's ‘Dark Angel.’ She also played Sue Storm in the Fantastic Four movies,” according to the Biography site, as well as “a different type of dancer in “Sin City” (2005) — a stripper with book smarts.” She married “longtime boyfriend Cash Warren, whom she met on the set of the ‘The Fantastic Four,’” in May 2008 and gave birth to a baby girl in June.
Honest enjoyed favorable coverage, riding the coattails of Alba’s success on screen, for several years. But in the summer of 2015, “photos of sunburned children started popping up on social media posts that tagged Honest, charging that its new and less greasy SPF 30 sunscreen formula didn’t work,” Kaitlin Ugolik writes in an Institutional Investor article published in March. “In an August blog post, Honest said its representatives had called many worried parents; it also offered a phone number for people to express their concerns.”
Ugolik’s analysis carries the headline “Jessica Alba’s Honest Co. Stars In A PR Blunder.” The subhead suggests, “for investors, the consumer goods business founded by the Hollywood actor highlights the risks of billing products as natural and safe.”
The bad press was amplified “earlier this year, [when] the Honest Company was hit with multiple lawsuits claiming its products contain chemicals the company says it avoids,” reports Kia Kokalitcheva for Fortune. “Alba has repeatedly denied the reports, calling the lawsuits ‘baseless’ and aimed at her company because it’s an ‘easy target.’”
The potential deal with Unilever “underscores, even with the success of companies targeting a narrow array of products, that e-commerce operations with strong brands may still face steep challenges and make more sense in the scope of larger CPG and e-commerce companies with ample financing,” suggest Matthew Lynley and Katie Roof on TechCrunch. “With enough capital — and not subject to the whims of investors and Wall Street — larger operations and consumer packaged goods companies can wait out the loss-leading periods as they grow and potentially end up with highly profitable divisions with strong branding.”
As for Unilever, you’ll recall that in a similar effort to spread its wingspan, it announced in July that it was acquiring the Dollar Shave Club, the male grooming brand, for a reported $1 billion. Dollar will operate as an independent company under founder and CEO Michael Dubin. That deal closed in August, VCJ reports.