Nestle Cuts Stake in L'Oreal With $10 Billion Deal -- Update
08 December 2021 - 7:50PM
Dow Jones News
By Yifan Wang
Nestle SA has agreed to cut its stake in L'Oreal SA by selling
$10.0 billion of shares back to the French cosmetics maker, the
latest development toward a long-speculated decoupling of two of
the world's biggest consumer-goods companies.
Under the agreement, Nestle will sell 22.26 million L'Oreal
shares for a total consideration of 8.9 billion euros, the two
companies said late Tuesday. L'Oreal will fund the deal with cash
and debt, and cancel the repurchased shares. The transaction will
have an accretive effect on its earnings per share of more than 4%
in a full year, L'Oreal said.
The deal will bring down Nestle's stake in L'Oreal to 20.1% from
23.3%, marking the Swiss company's first time to reduce its
shareholding in L'Oreal since 2014.
Analysts have for years anticipated a potential eventual exit by
Nestle from L'Oreal. In 2017, the Nescafe maker's relationship with
L'Oreal came under particular scrutiny, as Third Point, a hedge
fund headed by Daniel Loeb, launched a campaign to get Nestle to
sell its L'Oreal shares.
After the latest transaction, Nestle will retain its two
positions on the L'Oreal board of directors.
On the same day, Nestle also unveiled a new share-buyback
program to repurchase 20 billion Swiss francs ($21.6 billion) of
shares between 2022 and 2024. The plan, expected to commence on
Jan. 3, is subject to regulatory approvals and may be adjusted if
any sizable acquisitions take place, Nestle said.
As a result of the deal, the stake held by L'Oreal's other large
investor, the Bettencourt Meyers family, increases to 34.7% from
33.3%. L'Oreal said the French financial market supervisor wouldn't
require the family to launch a takeover offer, which is usually
required when a shareholder crosses the threshold of one third of
the capital and voting rights of a company.
Sarah Sloat in Barcelona contributed to this article.
Write to Yifan Wang at yifan.wang@wsj.com
(END) Dow Jones Newswires
December 08, 2021 03:35 ET (08:35 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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