L’Oreal shares surged the most in seven years on speculation that the death of the founding family’s matriarch, Liliane Bettencourt, could clear up the cosmetics maker’s ownership through a takeover or a buyback.
While Nestlé could have sold its 23% stake in L’Oreal before Bettencourt’s death Wednesday, her passing may make a sale to the French company more likely, according to analysts. The stake is worth about €23.8 billion ($28.4 billion) at the current share price. Another possibility is that L’Oreal attracts a takeover bid.
“Speculation will now inevitably be reignited around Nestlé’s intentions towards its L’Oreal stake,” Martin Deboo, an analyst at Jefferies, said in a report. “Much will depend on the intentions of the Bettencourt enfants.”
L’Oreal climbed 3.7% to €183.10 at 11:28 am in Paris after rising as much as 6.7% earlier.
Nestlé Stake
Nestlé has faced calls to sell its stake in L’Oreal, most recently from activist shareholder Dan Loeb, who revealed a stake of about 1.3% in the Swiss food company in June. Nestlé Chief Executive Officer Mark Schneider told Bloomberg Television in February that the L’Oreal stake is “highly strategic” and there is no short-term urgency to alter the relationship.
“It is with great sadness that we received the news of the passing away of Mrs. Liliane Bettencourt,” a Nestlé spokeswoman said via email. “We express our most sincere condolences and deepest sympathy to Mrs. Bettencourt’s family and to all at L’Oreal at this difficult moment. As you can imagine, this is not the right time to make any further comment.”
L’Oreal could sell its 9.4% stake in French drugmaker Sanofi to finance a repurchase of Nestlé’s stake, according to Pierre Tegner, an analyst at Natixis.
A judge in 2011 assigned Bettencourt’s daughter, Francoise Bettencourt Meyers, and two grandsons as guardians over her interests. She and her husband and one of her sons sit on L’Oreal’s board. The family’s 26% stake makes it L’Oreal’s largest shareholder.
“In this painful moment for us, I would like to reiterate, on behalf of our family, our entire commitment and loyalty to L’Oreal and to renew my confidence in its President Jean-Paul Agon and his teams worldwide,” Bettencourt Meyers said in a statement.
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