L’Oréal CEO Jean-Paul Agon’s comment that the company could sell its stake in French pharmaceutical company Sanofi to fund future acquisitions, made to French business daily
Les Echos,
has fueled speculation that L’Oréal plans to buy back the €22 billion stake that Nestlé, the Swiss food group, owns in the cosmetics maker,
the
Financial Times
reported.
L’Oréal has since “tried to quash speculation” that it plans to buy back Nestlé’s stake, the
FT
article said.
Mr. Agon said: “I didn’t say that we wished to buy Nestlé’s holding … I simply said that we had significant financial resources because we have positive cash flow and the 9 per cent of Sanofi.”
Nestlé holds 29.3% of L’Oréal. The Bettencourt family owns a 30.5% stake, the
FT
report noted. A clause in a 10-year contract gives L’Oréal the first option to buy the shares is set to expire on April 29, 2014. The company has said it does not plan to extend the clause, the
FT
article said.
The Bettencourt family recently said it has no interest in selling its stake in L’Oréal, the
FT
reported.
The Swiss and French companies have been on friendly terms for close to four decades and Nestlé has proved a stable, long-term shareholder for the French cosmetics group.
But shares in L’Oréal have gone up by about one-third in the past year, driving up the value of Nestlé’s stake.
That, in turn, has fuelled speculation Nestlé might be eyeing an opportunity to sell and use the proceeds to target an acquisition that fits more squarely with its food business.
(Source:
Financial Times,
Aug. 31-Sept. 1, 2013.)
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