Following the deal, Nestlé said it would own 20.1% of L’Oréal, up from 23.3% previously. L’Oréal, for its part, would buy back shares representing 4% of its capital and cancel them no later than August 29.
L’Oréal, which pays € 400 per share, said the transaction would have an accretion effect on the company’s earnings per share of more than 4% in a full year.
L’Oréal shares ended Tuesday up 3.96% to 424.8 euros while Nestlé gained 0.1% to 121.9 Swiss francs.
The packaged food maker also said its board of directors has decided to repurchase 20 billion Swiss francs ($ 21.63 billion) of its stock between 2022 and 2024, adding that it would adjust that program to suit. he made important acquisitions.
Nestlé has announced that it will end its current share buyback plan by the end of the year, having repurchased shares for 12.7 billion Swiss francs, almost two-thirds of the program’s volume. .
L’Oréal stressed about four years ago that it was ready to buy out the 23% of Nestlé if the Swiss shareholder were to sell them.
Nestlé closed in October 2019 the sale of its skin health business for 10.2 billion Swiss francs, as the group was preparing to abandon the underperforming activities.
Nestlé’s stake in the beauty giant has come under intense scrutiny over the years. The Swiss company maintained that its interest was both financial and strategic, even as an activist investor demanded the divestiture. In 2014, the company reduced its stake by 31%.
Centerview acted as senior advisor to L’Oréal for the transaction announced on Tuesday.