Dive Brief:

• Consumer goods giant Unilever PLC is discussing an acquisition of Honest Co., co-founded by actress Jessica Alba, sources told the Wall Street Journal.

• The deal would be valued at $1 billion, well below the the $1.7 billion valuation Honest enjoyed in a fundraising round last year. But, sources told the Journal that Honest may yet opt for an initial public offering instead, for which it has reportedly been preparing. 

• Honest, which has forged a niche in natural (or at least natural-seeming) consumer products like detergent and diapers, has raised more than $200 million from outside investors since it was founded in 2011, according to FactSet data cited by the Journal. In the event of a sale, Honest has pledged to pay some investors double their input.

Dive Insight:

Honest Co., which generates some $300 million in annual revenue according to the Wall Street Journal, is perhaps best known for its disposable baby diapers, although it also sells household, personal-care and beauty products. An acquisition of the company could give Unilever a boost in the natural product space, but it wouldn't come without the skepticism the "green" retailer has garnered in recent months.

Honest, which sells through Target and Whole Foods stores, was previously seen in a positive light by analysts who suggested its subscription offers bolster steady revenue. But the company has been beset by problems, including claims from tests conducted by the Wall Street Journal last year that showed some products contain chemicals the retailer has sworn off. The company has also faced lawsuits from customers who said its sunscreen was not protective. 

Honest has no doubt benefited from its tie to co-founder Jessica Alba, gleaning the cachet that often comes with celebrity endorsements and business efforts. But these days, with the rise of Instagram, Facebook and Snapchat, non-celebrity endorsers are becoming more important to brands because they lend an air of authenticity that stars can’t always provide. 

Despite the hit to its valuation, Honest may forgo the IPO route, as investors have begun to lose patience with startup efforts. Unilever recently acquired the Dollar Shave Club and Wal-Mart Stores Inc. recently scooped up Jet.com just a year after that launch.