Nestle CEO addresses L'Oréal investment speculation

The Swiss foods giant addressed speculation of a potential takeover of the cosmetics firm this morning

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Nestle’s CEO has addressed speculation about increasing its stake in L'Oréal, following the death of heiress Liliane Bettencourt.

Last Friday L'Oréal’s shares surged 4% – the most in seven years – on speculation that the cosmetics giant could be involved in takeover bids.

Bettencourt’s passing left analysts wondering if Nestle would increase its 23% holding, worth about $28bn, in L'Oréal.

However Reuters reports that this morning Nestle has put minds at ease by revealing it will not change its relationship with the French firm.

“Our approach to the L'Oréal investment is currently not changing,” Nestle CEO Mark Schneider told investors at the food group’s investor seminar in London.

Nestle’s original stake in L'Oréal in 1974 was a white knight investment and strategic for both parties, protecting the Bettencourt family – who feared hostile takeovers and even nationalisation of their company – and allowed Nestle to become the second largest shareholder.

The Bettencourt family remains the largest shareholder at 33%.

In 2004 an agreement was reached between Nestle and the L'Oréal dynasty that neither of them would increase their stakes in the company during Liliane Bettencourt's lifetime, and for six months after her death.

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