L’Oreal to Pay 6 Billion Euros to Buy Back Stock From Nestle

PARIS, France — L'Oreal SA, the world's largest cosmetics company, agreed to buy back 8 percent of its stock for 6 billion euros ($8.2 billion), from Nestle SA.

The Paris-based maker of Maybelline mascara will pay 3.4 billion euros in cash for 27.3 million shares held by Nestle, L’Oreal said in a statement. Its 50 percent stake in the companies’ joint venture Galderma, a Swiss dermatology pharmaceuticals company, will be sold to Vevey, Switzerland- based Nestle in exchange for 21.2 million shares, which it assigned an equity value of 2.6 billion euros.

The question of what to do with the L’Oreal holding has taxed Nestle since 2000, when Chairman Peter Brabeck-Letmathe was CEO and proposed a stronger push into cosmetics. The board deemed that too ambitious and Brabeck-Letmathe decided instead to focus on nutrition and health, according to the company’s official history. In addition to his Nestle role, Brabeck- Letmathe is a vice-chairman of L’Oreal’s board of directors.

“With this proposed acquisition of 50 percent of Galderma, Nestlé will pursue its strategic development in nutrition, health and wellness by expanding its activities to medical skin treatments,” Brabeck-Letmathe said in the statement.

All the shares bought back will be canceled, L’Oreal said. Nestle’s stake in L’Oreal will be reduced from 29.4 percent to 23.29 percent, and the Bettencourt family’s stake will increase from 30.6% to 33.31%, according to the statement. Liliane Bettencourt, who controls that stake, is Europe’s wealthiest woman, according to the Bloomberg Billionaires index.

L’Oreal closed at 129 euros yesterday.

By David Fickling; Editor: Frank Longid, Stephanie Wong