L’Oréal is to buy back 48.5 million of its own shares (8% of its share capital) from Nestlé, both companies have confirmed. To help fund the transaction, L’Oréal will sell to Nestlé its 50% stake in Swiss dermatology pharmaceuticals company Galderma (a 50/50 joint venture between L’Oréal and Nestlé) for an enterprise value of €3.1 billion (€2.6 billion euros of equity value), paid by Nestlé in L’Oréal shares (21.2 million shares). For the remainder, corresponding to 27.3 million shares, L’Oréal will pay €3.4 billion.
The price per L’Oréal share retained for this transaction is the average of its closing prices between Monday 11 November 2013 and Monday 10 February 2014: €124.48.
All the shares bought back by L’Oréal will be cancelled. Following the transaction, Nestlé’s stake in L’Oréal will be reduced from 29.4% to 23.29% of the share capital and the Bettencourt Meyers family’s stake in L’Oréal will increase from 30.6% to 33.31%.
Jean-Paul Agon: “This transaction represents a very positive strategic move for L’Oréal, its employees and its shareholders”In order to reflect the change of Nestlé’s stake in L’Oréal’s governance, the number of Nestlé representatives on L’Oréal’s Board of Directors will be adjusted from three to two Directors, and the ownership ceiling provisions of the shareholders’ agreement between Nestlé and the Bettencourt Meyers family will apply to their respective new holdings.
Nestlé Chairman Peter Brabeck-Letmathe commented: “With this proposed acquisition of 50% of Galderma, Nestlé will pursue its strategic development in Nutrition, Health, and Wellness, by expanding its activities 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. 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 the company, its employees as well as all other stakeholders.
“Following the decrease of its stake in L’Oréal, Nestlé will continue to support the development of L’Oréal as in the past 40 years. In this context, Nestlé will continue to act in concert with the Bettencourt Meyers family and the existing agreements, adapted to the new situation, will remain in place.”
L’Oréal Chairman and CEO Jean-Paul Agon commented: “This transaction represents a very positive strategic move for L’Oréal, its employees and its shareholders. 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.
“L’Oréal will also continue to benefit from the support of Nestlé, which has always been a loyal and constructive shareholder. 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.”
[houseAd5]
