The company announced that it would cut its stake in L’Oreal (OREP.PA) to about 20% by selling shares worth 8.9 billion euros ($10 billion) back to the French cosmetics brand, moving to reduce the weight of the beauty giant on its books for the first time in 7 years.
The Nescafe maker’s holding in the beauty giant has been subject to intense scrutiny over the years, and the Swiss company has maintained its interest was both financial and strategic, even when activist investor Third Point urged disposal in mid-2017. Since then, L’Oreal shares have more than doubled.
L’Oreal, which is paying 400 euros per share, said the deal will have an accretive effect on the company’s earnings per share of more than 4% in a full year. The beauty company is paying with cash and debt.
As a result of the transaction, which is expected to close in the coming days, the Bettencourt Meyers family, will see their stake rise to 34.7% from 33.3%, but will not be required to launch a takeover offer, as normally required for passing ownership thresholds above one-third of the capital.