Nestlé ponders sale of L’Oréal stake
L’Oréal has first refusal at buying up Nestlé’s own stake if the Swiss food company fails to make a commitment by April 2014, when their joint co-shareholder agreement terminates
After L’Oréal's stock soared by more than 50% in the last year, Switzerland based Nestlé, which owns a 29.6% stake in the company, is facing increased pressure from its investors to sell. Currently L’Oréal has first refusal at buying up Nestlé’s own stake if Nestlé fails to make a commitment by April 2014, when their joint co-shareholder agreement terminates.
For the moment, the Swiss food company is not giving much away. In terms of acquisitions, L’Oréal has Yves Saint Laurent Beaute, the Body Shop as well as a significant holding in French pharma player Sanofi. Recently L’Oréal boss Jean-Paul Agon described relations with Nestlé as “excellent”.
Françoise Bettencourt-Meyers, set to inherit her Mother’s 31% of the L’Oréal business on her death, recently indicated she was intent on supporting L’Oréal - thereby rebuffing rumours she could sell out to Nestlé. Meanwhile L’Oréal also needs cash for this year’s €500m share buyback.
So while the investor pressure is considerable, there could be more sitting it out to come. Unless a deal between the two companies is staggered over several years. Or luxury sales take a dive. On current evidence – L’Oréal net profits climbed 17.6% in Q4 - there’s little evidence of the latter.
