The beauty behemoth will finance the buyback of the 8% company stake by disposing its 50% stake in Swiss dermatology pharmaceuticals company Galderma to Nestlé for €3.1 billion, and cash for the rest. There will be no disposal of Sanofi by L’Oréal as was previously believed.
"This transaction represents a very positive strategic move for L'Oréal, its employees and its shareholders,” comments Jean-Paul Agon, chairman and CEO of L'Oréal.
“L'Oréal will focus exclusively on its Cosmetics business and its "Beauty for all" mission, its universalisation strategy and its ambition to win one billion new consumers."
"L'Oréal will indeed benefit from a very significant and reinforced presence from the founding Bettencourt Meyers family, who will continue to fully support the company as it always did in the past.”
Nestlé chairman Peter Brabeck-Letmathe says that his firm will now concentrate on Galderma having acquired the remaining shares of the company, and look to expand it to medical skin treatments.
In this respect, Nestlé will create a new centre of activities in this area, through a new entity: Nestlé Skin Health SA, and Galderma will be the foundation of this entity which will be run by Galderma's management.
“As a wholly owned subsidiary of Nestlé, Galderma will have all the required means for its development which will benefit to the company, its employees as well as all other stakeholders,” he says, and reinforces that even though Nestlé’s stake is lowered, it will continue to support the development of the French firm as in the past 40 years.
“L'Oréal will also continue to benefit from the support of Nestlé, which has always been a loyal and constructive shareholder,” adds Agon.
“Lastly, all of L'Oréal's shareholders will benefit from this transaction with an accretive impact on the company's earnings, resulting from the buyback and subsequent cancellation of L'Oréal shares held by Nestlé."
As per the transaction, all the shares bought back by L'Oréal will be cancelled and Nestlé's stake in L'Oréal will be reduced from 29.4% to 23.29% with the Bettencourt Meyers family's stake increasing from 30.6% to 33.31%.