High street beauty chain The Body Shop will be sold to Brazilian cosmetics manufacturer Natura Cosmeticos in a deal which could be worth 1 billion euro (£880million), its parent company has revealed.

French cosmetics giant L’Oreal announced today it has received a ‘firm’ offer from Natura for the business and has entered into ‘exclusive’ talks to sell the iconic British beauty firm after declining sales in the last year.

This is despite scepticism from analysts over the €1bn price tag because of the problems the business faces, mainly from growing competition and declining revenues.

Sold off: High street beauty chain The Body Shop will be sold to Brazilian cosmetics manufacturer Natura Cosmeticos in a deal which could be worth 1 billion euro (£880million)

L’Oreal put The Body Shop up for sale in February, more than 10 years after snapping up the ethical skincare brand, saying its was reviewing its strategy for the chain.

At the time, the company had said it was ‘exploring all strategic options’ regarding its ownership of the firm founded by Dame Anita Roddick.

L’Oreal chairman and chief executive, Jean-Paul Agon said: ‘I am very pleased to announce Natura as the potential new ‘home’ for The Body Shop.

‘It is the best new owner we could imagine to nurture the brand DNA around naturality and ethics.’

Jeremy Schwartz, chairman and chief executive of The Body Shop, added that the ethical values and expertise of Natura made it ‘the perfect new owner’ of the chain, and said he was confident the move would help to rejuvenate the brand and drive future expansion.

Natura said the acquisition would help it take a ‘decisive step towards internationalisation’.

Natura fought off a number of other bidders for The Body Group, including private equity group CVC and China’s Fosun.

The Body Shop has suffered sliding sales in the face of increased competition from high street retailers including Lush, and other L’Oréal brands such as NYX Cosmetics and Kiehl’s in recent months, with lacklustre performance in Saudi Arabia and Hong Kong continuing to dog the firm.

Sales at the brand sank five per cent to €920.8million (£784.2m) in 2016, down from €967.2m (£823.7m) in 2015.

Healthy profit: Dame Anita Roddick and her husband banked around £117m from their 18 per cent stake in the business when they backed the board’s decision to push through a £652.3m sale to L’Oreal in March 2006

But L’Oreal said in February that The Body Shop’s ‘momentum was good’ in Europe – especially in the UK – and across Latin America thanks to a new operation in Chile.

The deal is still subject to approval by regulators in Brazil and the US and will be submitted to L’Oréal’s employee representative body.

Dame Anita and her husband banked around £117m from their 18 per cent stake in the business when they backed the board’s decision to push through a £652.3m sale to L’Oreal in March 2006.

The Roddicks started The Body Shop in 1976 to help support their two young daughters, Justine and Samantha.

The Sussex-based company has 3,000 stores in 66 countries, employing around 22,000 people.

Natura Cosmeticos, which owns the Aesop brand, is at the forefront of the Brazilian beauty market and operates in seven South American countries and France.

Founded in 1969 in São Paulo by Antônio Luiz Seabra, who remains the company’s biggest shareholder, Natura is the largest Brazilian cosmetics company and is now worth an estimated $1.45bn, according to Forbes.