Nestlé confirmed this Tuesday, December 7, that it will sell a large part of its shares in L’Oréal with the idea of focusing on its core business, food and beverages.
The owner of the Nescafé brand will sell its shares in the French cosmetics manufacturer for a total value of 8.9 billion euros, the equivalent of about 10 billion dollars.
According to Nestlé, after the sale, it will only keep 20.1 percent of total L’Oréal shares.
In parallel, Nestlé confirmed that it will buy back shares worth about $ 21.6 billion between next year and 2024, and that it will finance it in part with the proceeds from the sale of its positions in L’Oréal. Likewise, it left the door open to new acquisitions.
L’Oreal, in 2017, had said that it was willing to buy back shares and that if Nestlé was willing to sell, they would have no problem acquiring them.
Nestlé has long wanted to divest itself of its food and beverage businesses.
In 2019, it ditched Nestlé Skin Health because it was “increasingly beyond the group’s strategic reach,” the then CEO had declared. It was bought by a consortium made up of the Swiss company EQT and the Abu Dhabi Investment Authority fund.
The funny thing is that this business had come into the hands of Nestlé in 2014, when the Swiss company added Galderma, the dermatologist it had acquired from L’Oréal. A real labyrinth.
Nestlé Skin Health was restructured in 2017 with the idea of rebuilding its profitability, but it failed. It manufactured and sold prescription drugs for skin care, wrinkle removers, and other health products.
When they bought it, the buyers made a kill branding from Skin Health and they went back to the old brand Galderma.
Nestlé’s shares in L’Oréal were originally bought in 1974, when L’Oréal’s heir, Liliane Bettencourt, feared being nationalized by France.
As Nestlé increasingly exits the cosmetics business, Nestlé will focus on what it really does very well: food and beverage, with products including KitKat chocolate bars, Perrier bottled water and Purina pet food, among others. thousands of brands.
In 2018, in its idea of eliminating its presence in “parallel” businesses, Nestlé sold its life insurance company Gerber to Western & Southern Financial Group for $ 1.5 billion.