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Nestlé Reducing Stake in L'Oréal by $10 Billion

December 17, 2021 Kelly Kovack
December 17, 2021

Nestlé is selling 22.26 million L'Oréal shares back to the French beauty company and reduced its stake to about 20.1% from 23.3%, but remains the second-largest shareholder after the Bettencourt Meyers family. Nestlé's position in L'Oréal dates back to 1974, the result of a protective move to shield L'Oréal from possible French nationalization. The Swiss company and the Bettencourt Meyers family held roughly equal stakes in L'Oréal until 2014, when the company bought back 8% of Nestlé's shares.

Nestle approached L'Oréal two months ago to reduce the weight of its L'Oréal holding while maintaining a level above 20%, allowing it to consolidate the investment on accounts, kicking off a flurry of negotiations that involved chairmen of both companies.

“This transaction with Nestlé is in the interest of the company and all of its shareholders," said Jean-Paul Agon, Chairman of L'Oréal's board, in a statement. "It constitutes a new strategic milestone in reinforcing the shareholder stability of L'Oréal around the Bettencourt Meyers founding family and Nestlé.”

Paying 400 euros per share, the deal's accretive effect will impact other L'Oréal stakeholders, including the Bettencourt Meyers family, whose stake in the group will increase to 34.7 percent from 33.3 percent. The beauty company is paying with cash and debt.

"We are delighted to continue the development of L'Oréal with the support of the Bettencourt Meyers family and Nestlé," said Nicolas Hieronimus, Chief Executive Officer of L'Oréal.

Nestlé will use the proceeds from the transaction to help fund its own $21.6 billion share-buyback program.

In October 2019, Nestlé sold its skin health unit to a consortium of investors led by EQT and a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) for CHF 10.2 billion ($10.1 billion). Rebranded as Galderma, it is the world's largest independent global dermatology company.


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