In late January The Body Shop said it was selling a swath of its international business in a deal hailed by the ethical beauty brand as a “decisive step towards delivering a strong turnaround strategy”.
The buyer of hundreds of stores in Europe and Asia was described as an unnamed “family office” by the chain’s new private equity owner Aurelius, which made no mention of having ties to the acquirer.
But rather than a wealthy family, the buyer was Friedrich Trautwein, a low-key German businessman who has previously been involved in at least five Aurelius investments including several corporate failures, according to company filings and people familiar with the matter.
“His speciality is working with troubled companies,” one person close to Aurelius, which bought The Body Shop from Brazil’s Natura & Co in November, told the Financial Times. “He’s basically the guy who can appoint administrators and run this through the cycle.”
People who have done business with both Trautwein and Aurelius said he frequently acted on the firm’s behalf, including sitting on portfolio companies’ boards and helping them turn their businesses around or handle their bankruptcies, and that he had a close relationship with chair Dirk Markus.
Trautwein’s involvement raises questions about the nature of the transaction, who stands to benefit and whether his role in dealing with the demise of several companies owned by Aurelius foreshadows what is to come for most of The Body Shop’s international division.
In what has been a chaotic ownership transition, Trautwein and The Body Shop UK’s administrators have been in negotiations over which countries he is responsible for running, according to some of the people and emails seen by the FT. This has created uncertainty at some of the international business units, the people added.
It took nearly two weeks before some senior executives in international branches of the business had any contact with their new owner.
The same week last month that Aurelius placed the UK company in the hands of administrators, Trautwein told international staff that the German arm had also fallen into administration, according to two of the people he briefed, who said the Belgian division was set to follow. The Danish arm has since been put into administration and the Austrian team is braced for bankruptcy, one of the people said.
Trautwein has known Markus since the latter worked at McKinsey in the late 1990s where he honed his skills in its restructuring arm before leaving and later becoming a founding partner of Aurelius.
At the new firm the duo first teamed up on a 2009 deal in which Aurelius carved out electronics manufacturer Blaupunkt from German conglomerate Bosch, using a playbook the firm would follow time and again when taking over struggling companies.
After taking steps to protect Blaupunkt’s intellectual property, retaining the benefits of the brand’s heritage by licensing it out to other electronics manufacturers, Aurelius later merged Blaupunkt with another German business, KWest, which eventually collapsed. Trautwein was called in as liquidator for KWest, a corporate filing shows, and Aurelius retained control of the Blaupunkt brand before selling it last year to a US company.
Meanwhile, Trautwein and Aurelius turned their attention to the UK. Trautwein was involved either as a director or on the board of an array of Aurelius acquisitions in the country including book wholesaler Bertram Books, TV sales business Ideal Shopping Direct and car repair group Autorestore, according to company filings and people familiar with the transactions.
He would fly in from Germany to work with the portfolio companies for a few days a week, helping them with strategy, two people said. He also worked on Aurelius’s behalf in at least one instance of a company filing for bankruptcy, another person added.
Some companies that worked with Trautwein struggled. Bertram Books and Ideal Shopping both filed for bankruptcy in recent years.
Described by people who have done business with him as super-smart and uncompromising, his relationship with Markus was clear to those with whom he worked. “He’s the only person I’ve ever seen scold Markus,” one said.
By last year, both Trautwein and Aurelius were ready to take on their biggest challenge yet: turning around The Body Shop.
Aurelius in November agreed a £207mn deal to buy the company from Natura, pledging to restore it to its former glory as a champion of ethical capitalism, having first expressed an interest in August.
But the business quickly ran into trouble after poor Christmas sales, compounded by the complexity of being present in about 70 markets from Canada to Japan, some of which were lossmaking.
Aurelius decided to carve out some of its international units including those in Germany, France, Japan and Belgium, along with roughly half a dozen others.
Trautwein emerged as a buyer, taking over units in markets including Austria, Belgium, Germany, Ireland and Luxembourg, according to people familiar with the matter.
Aurelius, which has previously said it did not profit from the sale of its international division, did not initially name Trautwein as the buyer or disclose its previous relationship with him.
The fact an anonymous party was acquiring a large chunk of the business caused consternation within a company that weeks earlier had been owned by a multibillion-dollar international conglomerate, according to multiple Body Shop employees. They were told days later that the buyer was Alma24, a company set up in late January by Trautwein.
FRP and Aurelius declined to comment. Trautwein did not respond to requests for comment.
In several of its markets, some former and current directors refused to sign the necessary paperwork to transfer operations because they feared they may be held accountable for any future insolvency, according to people familiar with the situation.
The French operations, protected by strict employee protection rules, have been left stranded, current employees said. Staff have been told that their part of the business has not been acquired by Trautwein but that it has also been cut off by The Body Shop, according to two people with knowledge of the matter.
With hundreds of jobs at stake and a sprawling network of companies to oversee, Trautwein will have his work cut out to turn things around.
“He won’t ever let go,” said one executive who has previously worked with him. “He prides himself on it.”
Meanwhile, employees continue to face an uncertain future. “Every time I wake up, it’s like starting the same nightmare,” one senior Body Shop executive said.
