The owners of the Gesparal Holding company, the Bettencourt family and Nestlé, are to become direct shareholders of L'Oréal. The company, which currently owns 53.8 per cent of L'Oreal's Capital and 71.7 per cent of its voting rights, is to be absorbed in a move thought to simplify L'Oreal's shareholding structure.
"The clarification of the shareholding structure and the improved corporate governance will enhance transparency and simplicity. The agreement is extremely favourable to the company, employees, clients and to all of its shareholders," said CEO of L'Oréal Lindsay Owen-Jones.
The new agreement includes the merger and absorption of Gesparal (a L'Oreal shareholder since 1974), the elimination of double voting rights, the continuation of the respective positions of the Bettencourt family and Nestlé in L'Oréal capital and a further development of L'Oréal's corporate governance.
On completion of the transaction the Bettencourt family and Nestlé will become direct shareholders of L'Oréal with 27.5 per cent and 26.4 per cent of the capital, and 28.6 per cent and 27.5 per cent of its voting rights respectively.
The agreement also means a change for minority shareholders, raising their voting rights in L'Oréal from 28 per cent to 44 per cent, making them for the first time the company's number-one shareholder for voting rights.
The board of directors of L'Oréal will be asked to create a committee for strategy and implementation made up of 6 members: the CEO of L'Oréal who will chair the committee, 2 members will be amongst the board members representing the Bettencourt family, 2 others amongst the members representing Nestlé, and one will be an independent board member.
The agreement is to be submitted to the French financial market regulatory authority (AMF). The merger provided for in the agreement is conditional upon the finding by the market authorities that there is no requirement for a public offer for L'Oréal shares in light of the planned merger.
The proposal is subject to approval from L'Oréal shareholders at a meeting on April 29. If accepted, the Bettencourts and Nestlé will be under contract not to sell the shares for a five-year period.