Nestlé reduces stake in L’Oréal with US$10 billion sale

Nestlé reduces stake in L’Oréal with US$10 billion sale

THE WHAT Nestlé has reduced its stake in L’Oréal by selling €8.9 billion (US$10 billion) worth of shares to L’Oréal for €400 a share. 

THE DETAILS The sale trims its stake in French beauty giant to 20.1 percent, with Nestlé remaining fully supportive of the company’s value creation strategy. 

Nestlé aimed to keep its percentage above 20 percent, down from 23.3 percent. 

According to a press release, “The Nestlé Board of Directors has decided to replace the existing share buyback program with a new plan which is expected to commence on January 3, 2022. Under this new program Nestlé plans to repurchase CHF 20 billion of its shares over the period 2022 to 2024. The company expects to buy around CHF 10 billion of shares in the first twelve months. The new program is subject to the necessary regulatory approvals.”

Following the sale, the Bettencourt Meyers family’s stake in L’Oréal will increase from 33.3 percent to 34.7 percent. The family has received a waiver from the French stock market regulator to avoid a public offering for the company, despite crossing the company ownership threshold of a third. 

THE WHY The news follows years of pressure on Nestlé from investors and analysts for the company to sell its shares, with activist investor Third Point pushing for a sale in 2017. Nestlé will retain its two positions on the L’Oréal Board of Directors

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