Silver as an investment

Jessica Alba Laughs Last After $1 Billion Offer For Her “Honest” Company

While we would never wish ill will upon anyone, particularly someone with Jessica Alba’s particular “talent”, earlier this year we must admit that we derived some comfort from a WSJ article alleging that Alba’s “Honest Company” hadn’t really been that honest in disclosing which chemicals were used to make their “non-toxic” diapers and detergents.  It’s not that we took any delight in Alba’s potential failure, but we were at least relieved that future investors might be spared additional investing “opportunities” in America’s latest mania-driven bubble.  Back in March we wrote the following:

Back in the summer of 2014, roughly a year and a half before the second bubble of profitless, “story”, aka “tech”, companies had burst, we wrote in dismay, that “the true indicator of just how bubbly the second coming of the dot com era has become comes courtesy of none other than Jessica Alba’s, yes the actress, own startup: a company launched in 2012 and which makes “non-toxic” diapers (as opposed to toxic diapers?), called the Honest Co., has raised $70 million at a valuation just shy of $1 billion in preparation for an IPO.”

As we noted then, it looked as if the Alba bubble may have burst (as frightening as that may sound) when the WSJ released an article alleging that Alba’s company may have been using chemicals in their products that they had claimed to shun. 

What isn’t as easily explained is that since we profiled Alba’s “Honest Company”, its valuation has grown by another 70%, and according to the WSJ it is now $1.7 billion with total funding raised more than $200 million “thanks to its marketing of cleaning supplies, diapers and other consumer products that it says are safer and more ecologically friendly than other brands.”

 

But what Alba herself will have a very difficult time explaining is why, just like in the case of Theranos, her company it not only grossly misnamed, but may also be another fraud, because according to a just released WSJ expose, “one of the primary ingredients Honest tells consumers to avoid is a cleaning agent called sodium lauryl sulfate, or SLS, which can be found in everyday household items from Colgate toothpaste to Tide detergent and Honest says can irritate skin.

Honest

Alas, Jessica Alba and her “Honest Company” may get the last laugh, according to the Wall Street Journal, as Unilever, maker of Dove soaps and Axe body sprays, is in talks to acquire Alba’s company for $1 billion.  That said, we weren’t totally wrong as Unilever’s contemplated purchase price is over 40% less than the $1.7BN valuation placed on Honest in it’s latest fundraising round.  Per the Wall Street Journal:

Unilever PLC is in talks to acquire Honest Co., the consumer-products retailer co-founded by actress Jessica Alba, according to people familiar with the matter.

 

Unilever, maker of Dove soaps and Axe body sprays, is discussing a deal valued at over $1 billion but significantly less than the $1.7 billion valuation that was placed on Honest in a fundraising round last year, the people said. The talks are at an early stage, and Honest hasn’t ruled out going for an initial public offering instead, one of the people said.

 

Honest has raised more than $200 million from outside investors since the Santa Monica, Calif., company’s founding in 2011, according to FactSet data. Those investors include venture-capital firms General Catalyst Partners and Lightspeed Venture Partners as well as money managers Fidelity Management & Research Co. and Wellington Management Co. In the event of a sale, Honest has pledged to pay some investors double their investment.

According to the WSJ, the Honest Company generates roughly $300 million in annual revenue which pegs Unilever’s bid at 3.3x revenue.  While a few short years ago that may have seemed like an outrageous valuation for a consumer staple business, today it’s right in line with the likes of P&G and Clorox which bubbled over as pension funds have begun trading consumer staple equities and their dividends as the equivalent of investment grade bonds.  Similar risk profile, right? 

But, for our many readers who couldn’t give a rip about the Honest Company or it’s valuation but just clicked on this post because you liked the teaser image…we leave you with this parting gift:

Alba

Alba