News Column

pounds 5.4bn share buy-back keeps L'Oreal French

February 12, 2014

Kim Willsher Paris

Cosmetics group L'Oreal is to buy back 8% of its shares from the Swiss food group Nestle in what is seen as a "patriotic" move to avoid the French company falling under foreign control.

The move, which will cost L'Oreal around euros 6.5bn (pounds 5.4bn), returns the stock to the Bettencourt family, which founded the company in 1909.

The buy-back will reduce Nestle's holding in L'Oreal to 23.3%, while the Bettencourts' holding will rise to a third.

The announcement yesterday put an end to fears that Nestle might have been tempted to sell L'Oreal shares to the highest bidder when a 40-year agreement came to an end in April.

Under the arrangement, L'Oreal had first refusal on its shares if Nestle wanted to sell. Fearing that Nestle might be tempted to offload its shares to an American or Asian group which might then lead a hostile takeover bid, French president Francois Hollande's officials were said to have put pressure on both companies to conclude a deal.

L'Oreal was founded by chemist Eugene Schueller, the father of L'Oreal heiress Liliane Bettencourt. Since 2008 Bettencourt, 91, France's richest woman, has been involved in a bitter family dispute with her only child, daughter Francoise Bettencourt Meyers, over generous gifts the heiress gave to a society photographer.

Nestle chairman Peter Brabeck said the share sale was not the start of amicable divorce proceedings between the two firms. "This sale is not a first step towards an exit," he told French journalists.

However, French radio station Europe 1 reported: "The French company, the most admired in the world . . . will remain a French company."


Actor Blake Lively models for L'Oreal Photograph: Bertrand Rindoff Petroff/Getty

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Source: Guardian (UK)

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