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Disappointing $1 Billion Unilever Bid Highlights Honest Co.'s Product Concerns

Disappointing $1 Billion Unilever Bid Highlights Honest Co.'s Product Concerns

Unilever plc (ADR) (NYSE: UL) is reportedly in talks to acquire actress Jessica Alba’s consumer products retail company Honest Co.

Unfortunately for Alba, Unilever’s $1 billion bid is well short of the company’s $1.7 billion valuation following a 2015 fundraising round.

One of the major reservations Unilever likely has involves lawsuits against Honest Co. dealing with its product lines.

In April, the Organic Consumers Association (OCA) filed suit against Honest Co. because the company’s Premium Infant Formula, which is labeled as “organic,” allegedly contains 11 synthetic ingredients. These ingredients are not allowed in products labeled as “organic” according to federal law.

Related Link: What Are Jessica Alba's Honest Co.'s Most Popular Products?

Last year, Honest Co. was sued over the labeling and effectiveness of its sunscreen as well.

A 2016 Wall Street Journal investigation found sodium lauryl sulfate (SLS) in Honest Co.’s laundry detergent. SLS is explicitly listed among the chemicals on the detergent’s “Honestly free of” label, but two independent labs reportedly found the chemical's presence in the detergent.

“We have evidence that our laundry detergent contains SCS, not SLS, and any contention to the contrary is wrong,” company attorney Craig Gatarz said in a letter following the Wall Street Journal report.

The Journal also noted that the company subsequently changed the wording of its “Honestly Free Guarantee” on its website. Instead of claiming its products are “honestly free of” ingredients like SLS, it now claims they are “Honestly made without” the ingredients.

Ironically, it is likely the honesty and reliability of Honest Co.’s marketing that has weighed on its valuation since last year.

Talks with Unilever are reportedly still in the early stages.

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