L’Oreal changes shareholder structure

PARIS, Feb 4 (AFP) – The French cosmetics group L’Oreal – which owns brands such as Lancome, Vichy and Maybelline – has touched up its shareholder structure in a move that gives Swiss food giant Nestle a chance to acquire it.

Lilianne Bettencourt, the 81-year-old billionaire and daughter of company founder Eugene Schueller, and Nestle, L’Oreal’s two biggest shareholders, agreed to dissolve the holding company through which they controlled the cosmetics giant for more than 30 years.

Following the agreement, Bettencourt will directly hold 27.5 percent of L’Oreal’s capital, while Nestle will own 26.4 percent.

For L’Oreal, continuity is ensured for the time being as Nestle and the
Bettencourt family agreed late Tuesday that their holdings would not increase “during the lifetime of Mrs Bettencourt, and in any case during a period of at least three years”.

If a public offer were made for the company however, both could sell their holdings or make a better offer for outstanding shares according to the agreement.

“Should there be a public tender offer for l’Oreal shares by a third party, the Bettencourt family and Nestle would have the right to tender their shares or to make a counter-offer,” they said in a joint statment.

The cosmetics group could an attractive takeover target, as it is currently capitalised at
EUR 40 billion (USD 50 billion) while posting annual sales of EUR 14 billion and profit of almost EUR 2 billion.

However, analysts say few companies are in a position to make an offer.Bettencourt is regularly listed as France’s richest person, with a personal fortune estimated at
EUR 13 billion.

Nestle nonetheless was well placed to take over the company one day, because it has three representatives on the board, as many as the Bettencourt family.

But analysts said the agreement also took a weight off Nestle’s shoulders because the Swiss company no longer had the obligation to buy Bettencourt’s shares if she wanted to sell as was the case previously.

Analysts also doubted Nestle would try to take over L’Oreal, saying the Swiss group had other priorities.

A spokesman for Nestle said: “Our stake in L’Oreal is strategic, we stand by that.”

L’Oreal’s chief executive Lindsay Owen-Jones dismissed concerns that the company could become a takeover target.

“L’Oreal is not the little vulnerable company some people think,” he said.

He said a takeover by another company in the industry was unlikely because of competition issues and it was equally unlikely that a company from outside the sector would make a bid.

“So L’Oreal sees its long-term future with extreme tranquility,” he said.Investors appeared to be satisfied with the deal and L’Oreal’s shares were showing a gain of 0.78 percent at
EUR 64.45 in mid-afternoon trading.

“L’Oreal’s management has secured its independence and shareholders are happy,” analysts James Amoroso and Mario Montagnani at Geneva bank Pictet said in a note to clients.

Nestle’s shares were showing a gain of 1.06 percent at 335.00 Swiss francs.

© AFP

                                                              Subject: France news