Retail

Will Jessica Alba's Honest Company Get Bought Out?

It seems that the Jessica Alba cofounded company Honest Company may be in talks to sell out to one of the big consumer product firms, like Unilever or Procter & Gamble. Honest specializes in diaper and personal care products.

Little is known about the talks, including how advanced they are or what acquisition price point is being discussed. Honest Company was most recently valued at $1.7 billion after raising $100 million in financing last year. The five-year-old firm has raised $222 million in total and brought in about $300 million in revenue last year.

The companies involved did not immediately respond to a request for comment.

Consumer packaged goods firms have of late show an upswing of interest in startup brands, like Honest or Dollar Shave Club, which Unilever snapped up for a cool $1 billion over the summer.

The move comes as the brands are reconsidering their strategy for pursuing and retaining customers — a need that was once completely filled by retail stores as an intermediary. But brands like Honest only derive about 40 percent of their sales from retail locations; the remainder comes through online sales at Honest.com and HonestBeauty.com.

Honest Company was founded in 2011, is led by CEO Brian Lee and started out by selling nontoxic, eco-friendly diapers and other baby products. The brand has increased in scope to a variety of other products. Much of the online sales volume derives from subscription product bundles, which has led to complaints from consumers who were not entirely sure what they were signing on for. There have also been complaints that canceling is more difficult than necessary.

The brand has also faced criticism that Honest products are not quite as pure as they claim to be and contain detergents and chemicals that the firm said it would avoid. Honest has denied these claims.

As recently as February of this year, Honest was apparently moving toward an IPO but put those plans on hold. Sources say at issue was the public market's enthusiasm for the offering and the relatively better prospects in the M&A arena.

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