Ethical beauty products firm Body Shop is in the sights of L'Oreal after the French cosmetics giant revealed it was considering an approach.
L'Oreal said an offer for Body Shop - set up more than 30 years ago by Anita and Gordon Roddick - was among the strategic options it has under review, although it stressed no decisions had been made.
Dame Anita and Mr Roddick still own around 18 per cent of the company, but no longer have day-to-day roles in the running of the business.
They have already indicated their willingness to sell by reducing their shareholding over the last 12-18 months. Co-founder Iain McGlinn's shareholding takes their total to around 40 per cent.
Shares jumped 11 per cent to give Body Shop a market value of around £600 million.
L'Oreal's statement to the stock market came just a day after Body Shop said it knew of no reason why its shares had risen in recent days.
Speculation among analysts had centred on the possibility that members of the Body Shop management team were lining up their own buy-out proposal.
L'Oreal said its interest in Body Shop was being considered at management level. No approach had been made.
In a statement to the Stock Exchange the company, which makes Ambre Solaire sun cream and Lancome lipsticks, noted: "L'Oreal's management is continually evaluating a wide range of strategic alternatives that may add value to its shareholders, including a possible offer for Body Shop.
"Any offer, if made, is likely to be solely in cash. However, no decision has been made regarding any offer, L'Oreal's board has not been consulted and no approach has been made to Body Shop."
Analysts believe any offer for Body Shop will need to be priced between 280p and 300p a share - giving the company a value of up to £645 million.
Body Shop said it had noted the L'Oreal announcement.
A statement from the firm said: "Body Shop has not received any proposal from L'Oreal.
"The board remains confident about the future prospects for the group and its ability to deliver significant value for its shareholders." ..SUPL: