VEVEY (dpa-AFX) - Nestle SA (NSRGY.PK, NSTR.L) will reduce its stake in Cosmetics and beauty products giant L'Oreal Co. (LRLCY.PK) to 20.1 percent from 23.3 percent, the companies said in a statement.
The Swiss food and beverage giant agreed to sell 22.26 million of L'Oréal shares to L'Oréal for 400 euros per share, with a total consideration of about 8.9 billion euros or 9.3 billion Swiss francs.
All the shares repurchased by L'Oréal will be exclusively purchased for cancellation purposes and will be cancelled, at the latest on August 29, 2022. The repurchased shares represent 4 percent of its capital, L'Oréal said.
According to L'Oréal, all other shareholders will benefit from an accretive effect by the same proportion, including the Bettencourt Meyers family, whose stake in L'Oréal will increase from 33.3% to 34.7%.
L'Oréal noted that the transaction will also have an accretive effect on its earnings per share of more than 4% in a full year. The share buyback will be financed in a balanced manner by the Group's available cash on the one hand, and new debt on the other.
Meanwhile, Nestlé said it will retain its two positions on the L'Oréal Board of Directors. Nestlé has decided to replace the existing share buyback program with a new plan which is expected to commence on January 3, 2022.
Under the new program, Nestlé plans to repurchase 20 billion francs of its shares over the period 2022 to 2024. The company expects to buy around 10 billion francs of shares in the first twelve months.
Consequently, Nestlé expects to terminate its existing share buyback program on December 31, 2021. As at December 7, 2021, it has repurchased about 120.29 million of its shares for a total amount of 12.7 billion francs at an average price of 105.61 per share francs, almost two thirds of the anticipated 20 billion francs existing program volume.
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