L’Oréal is reportedly buying back 8% of its shares from Nestlé, loosening their long-standing alliance.
L’Oréal will buy 48.5 million of its own shares. 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%.
The buyback will be refinanced partially through the disposal by L'Oréal to Nestlé of its 50% stake in Swiss dermatology pharmaceuticals company Galderma, dermatology-focused, Swiss-based joint venture between Nestlé and L’Oréal.
The transaction is expected to close by the end of the first semester in 2014.
“This transaction presents a very positive strategic move for L’Oréal, its employees and its shareholders, stated 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 universalization strategy and its ambition to win 1 billion new customers.”
For Nestle, the acquisition of 50% of Galderma will enable it to form Nestlé Skin Health S.A., and thus pursue development in nutrition, health and wellness.
“Building on Nestlé’s historic strengths as a science based nutrition, health and wellness company, and through the recent creation of Nestlé Health Science S.A., the company has reinforced its strategic direction to offer nutritional solutions from food and beverage to scientific products for a healthier life,” said Nestlé chairman Peter Brabeck-Letmathe. “By creating Nestlé Skin Health S.A. and by leveraging Galderma’s current portfolio, formulations and innovative research, Nestlé will now be able to provide science-based solutions for skin conditions. We strive to have a portfolio of innovative products that meet the full spectrum of people’s skin health needs over the course of their lives and to provide a holistic approach to people’s health.”
The new Nestlé Skin Health entity will have a range of products for the skin, hair and nail, including self-medication drugs, such quasi-drugs as medicated soaps or sunscreens, therapeutic skin care products, nutraceuticals, prescription drugs and medical devices, Nestlé stated.