The world's largest cosmetics maker, L'Oreal, has announced that it is to pay about $8.2 billion to buy back 8% of its shares from Swiss food giant Nestlé.
The companies confirmed the complex deal yesterday in a joint statement, which marks the devolution of a long alliance between the two multinational companies.
"This is not a sign of disengagement or a strategic change," Nestlé President Peter Brabeck-Letmathe told reporters from Reuters and the WSJ in Paris.
Nestlé, which is based in Vevey, Switzerland, has held almost 30% of L’Oréal since 1974. The companies said their respective boards had agreed unanimously on Monday that L’Oréal would buy back 48.5 million of its own shares from Nestlé, an amount equivalent to 8% of L’Oréal’s share capital.
The deal will be financed in two separate parts. First, Nestlé will pay 21.2 million in L’Oréal shares for the French company’s 50% stake in Galderma, for an equity value of €2.6 billion, ($3.6 billion).
Under the deal, which is subject to regulatory approval, the companies said Nestlé's stake in L'Oreal will be reduced from 29.4 to 23.29% of the share capital and the Bettencourt Meyers family's stake in L'Oreal will increase from 30.6% to 33.31%.
Nestlé says it is creating a new unit, Nestle Skin Health, that will be run by Galderma's management.
In related news, L'Oreal reported a more-than-expected underlying sales growth for their fourth quarter, helped by solid demand in the Americas and western Europe, and strong growth in new markets in Africa and the Middle East. Sales growth reached 5.4%, beating a 4.5-5% forecast and the 4.1% growth achieved in the third quarter.
© 2014 - European Supermarket Magazine by Enda Dowling
