L'Oréal together with Nestlé has announced that their respective Boards of Directors have approved a strategic transaction for both companies under which L'Oréal will buy 48.5m of its own shares (8% of its share capital) from Nestlé.
This buyback will be financed partially through the disposal by L'Oréal to Nestlé of its 50% stake in Swiss dermatology pharmaceuticals company Galderma (a 50/50 joint venture between L'Oréal and Nestlé), for an enterprise value of €3.1bn paid by Nestlé in L'Oréal shares (21.2 million shares). The remainder (corresponding to 27.3m L'Oréal shares held by Nestlé) will be financed by cash for an amount of €3.4bn.
All the shares bought back by L'Oréal will be cancelled. Following the transaction, Nestlé's stake in L'Oréal will be reduced from 29.4% to 23.29% of the share capital, and the Bettencourt Meyers family's stake in L'Oréal will increase from 30.6% to 33.31%.
In order to reflect the change of Nestlé's stake in L'Oréal's governance, the number of Nestlé representatives on L'Oréal's Board of Directors will be adjusted from 3 to 2 Directors.
Peter Brabeck-Letmathe, Chairman of Nestlé, said: "With this proposed acquisition of 50% of Galderma, Nestlé will pursue its strategic development in Nutrition, Health, and Wellness, by expanding its activities to medical skin treatments. In this respect, Nestlé will create a new centre of activities in this area, through a new entity: Nestlé Skin Health SA. Following the decrease of its stake in L'Oréal, Nestlé will continue to support the development of L'Oréal. In this context, Nestlé will continue to act in concert with the Bettencourt Meyers family and the existing agreements, adapted to the new situation, will remain in place."
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