Ahava’s factory in Mitzpe Shalem, an Israeli settlement built in the occupied West Bank in violation of international law. (Viktor Karppinen/Flickr)

The owners of boycott-hit Dead Sea cosmetics maker Ahava have announced a deal to sell a majority stake in the Israeli company.

Palestinian rights campaigners are giving the news a cautious welcome as a sign that Ahava’s brand has been damaged by its complicity in the Israeli occupation of Palestinian land.

According to the research and monitoring group Who Profits, Ahava extracts Dead Sea mud from the occupied West Bank, exploiting Palestinian natural resources in violation of international law.

Its factory and visitors center are located in Mitzpe Shalem, a settlement also illegally built in the West Bank. A large percentage of Ahava shares are held by two West Bank settlements.

The name of the buyer was not disclosed, but earlier this week Israeli media reported that the owners had signed an “agreement in principle” to sell to the Chinese investment company Fosun.

The buyer is to take at least a 51 percent stake in Ahava. The deal values the company, which has recently shed a quarter of its workforce, at about $76 million.

Fosun did not respond to an email seeking comment for this article.

“Tainted”

“This signifies that Ahava’s brand was so tainted because of the prolonged international boycott campaign against them that they were unable to find investors in the United States or Europe,” Nancy Kricorian, manager of CODEPINK’s Stolen Beauty boycott campaign, told The Electronic Intifada.

“So they had to turn to China, where the boycott in support of Palestinian rights has not yet gained the same traction it has in other places,” Kricorian added.

In its report on the sale, Financial Times labels Ahava “a business targeted by campaigners calling for a boycott of Israeli settlements” – an indicator of how tarnished its reputation has become.

European Union governments, including the UK and France, have warned their national companies of the legal and reputational risks of doing business in Israeli settlements.

Even the Obama administration recently indicated that the US would not act to prevent boycotts of settlement products.

Despite this, the EU itself has subsidized Ahava’s research in apparent violation of its own policies.

Still, such warnings may deter potential investors.

“Stalled”

In 2012, Ahava hired the investment bank Goldman Sachs to help it improve its international marketing, a sensible step if the goal was to find overseas investors.

But the cosmetics industry publication WWD reported last year that Ahava’s efforts to find a buyer had “stalled” (“Let’s Make a Deal: The Beauty M&A Scene,” 9 May 2014 – requires subscription).

But Kricorian remains cautious. “We are waiting for the details of the final deal to be announced,” she said. “Will Fosun move Ahava’s factory out of the occupied West Bank? Will Fosun buy the entire stake or will two illegal settlements – Mitzpe Shalem and Kalia – remain co-owners of the enterprise? Will Fosun put an end to the company’s pillaging of mud from occupied shores?”

In June, Ahava announced that it is considering moving its factory into present-day Israel, a step Israeli media suggested was related to the boycott campaign and EU proposals to require special labeling on goods from Israeli settlements.

Ahava is currently owned by several Israeli shareholders, including Gaon Holdings. Mitzpe Shalem holds a 35 percent stake.

Shamrock Holdings, the investment arm of the US Disney family, also owns shares.

China-Israel ties

With Israel increasingly worried about the growth of the boycott, divestment and sanctions (BDS) campaign in the West, its government is fostering closer economic, military and political ties with China.

The sale of Ahava to Fosun might be one outcome. The Chinese investment company, which held assets of about $28 billion at the end of 2013, has made two other recent acquisitions in Israel: the insurance company Phoenix Holdings Ltd. and cosmetic laser manufacturer Alma Lasers.

Buying Israeli firms in general, and settlement profiteers in particular, is clearly at odds with Fosun’s policy on corporate social responsibility.

“Fosun cares about the natural environment and has taken an important role in promoting positive and sustainable development of society for years,” the company claims.

But by buying Ahava, Fosun would only be helping to sustain occupation and aiding the violent colonization and illegal exploitation of Palestinian land and resources.