L’Oreal, the French cosmetics giant, has experienced a 1.4% increase in its shares following an announcement made by Nestle. The Swiss company revealed its plans to sell shares worth $10.05 billion, which will reduce its stake in L’Oreal to approximately 20%. This move will result in Nestle owning 20.1% of L’Oreal, down from their previous 23.3% stake.

In response to this transaction, L’Oreal has announced its intention to repurchase shares equivalent to 4% of its capital and eliminate them by August 29. The company will be paying 400 euros per share, funding the deal through a combination of cash and debt. This agreement is expected to have a positive impact on L’Oreal’s earnings per share, with an increase of over 4% within a year. The transaction is set to be finalized in the coming days.

While Nestle reduces its stake, the Bettencourt Meyers family, who are already major stakeholders in L’Oreal, will see their stake increase to 34.7% from their previous 33.3%. However, despite this increase, they are not obligated to make a takeover offer, which is typically required when ownership surpasses one-third of the company’s capital.

This development in L’Oreal’s ownership structure highlights the strategic decisions being made in the beauty industry. Nestle’s decision to reduce its stake in L’Oreal indicates a shift in their investment priorities, while L’Oreal’s decision to repurchase shares reflects their confidence in their own performance and growth prospects.

Ultimately, both parties are seeking to optimize their positions within the market and ensure the best outcome for their respective shareholders. It will be interesting to see how this ownership change affects L’Oreal’s future plans and strategies in the global beauty market.

For more information, you can refer to the following links:
1. Reuters: Nestle plans to sell stake in L’Oreal
2. Cosmetics Business: L’Oreal to repurchase shares as part of Nestle stake reduction