French stock market regulator Autorite des Marches Financiers (AMF) announced that it was satisfied with the terms of the proposal following the successful completion of a second investigation.
The AMF’s statement also said that Clarins would continue with its initial plan to buy back outstanding shares in the business in order to proceed with a delisting from the Paris Bourse.
The buy back scheme is being managed by Financiere FC, the holding company for Clarins that handles the company’s financial matters and is also run by the Courtin-Clarins family.
Buy back scheme delayed
The AMF’s decision comes after a delay in the process following a complaint from financial advisory group Deminor that questioned the validity of the proposed buy back.
Deminor said that the scheme would not comply with regulations concerning the independence of Fairness Finance regulations.
Subsequently a second investigation into the proposal was launched, pushing back the initial proposed launch date from mid-July to now.
Clarins will now go ahead with its plans, which is backed by the CIC Bank, offering to buy shares at €55.50 per share for each of the 15.2 million shares that are still outstanding, suggesting a total investment of around €840m.
Avoding investor speculation
The buy back aims to give the company complete financial independence, steering it away from speculators on the stock market who often bet for short term gains.
As a result of this kind of speculation Clarins has been subject to a number of investor rallies in the past year or so, which the company says could jeopardize its mid- to long-term financial goals.
Christian Courtins-Clarins, Clarins CEO, says the company will focus on its leading brands, Thierry Mugler, Azzaro and Clarins once the delisting is completed.
Christian Courtin-Clarins currently maintains around 65 per cent of the business, along with his brother Olivier, who is responsible for the company's research and development.
Results for first six months
Last week Clarins posted its results for the first six months of the year that showed a disappointing fall in sales.
The company blamed unfavourable exchange rates and the challenging market conditions for its failure to increase turnover so far in 2008.
Net sales for the six months ending June, 30, dropped 1.8 per cent to €485.8m. The strength of the Euro weighed heavily on the figures, but at constant exchange rates, the firm achieved a sales increase of 4.1 per cent.