L’Oreal ready to buy Nestle stake in cosmetics leader

Bottles of shampoos, conditioners and color spray are displayed at cosmetics company L'Oreal's new World hair research centre in Saint-Ouen near Paris. (Reuters)
Updated 09 February 2018
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L’Oreal ready to buy Nestle stake in cosmetics leader

PARIS: L’Oreal signalled its readiness to buy Nestle’s 23 percent stake in the world’s biggest cosmetics firm on Friday, which along with strong results lifted the French company’s shares.
L’Oreal said it could finance a purchase of the holding, which is now worth around €22.3 billion ($27.4 billion), with cash, by selling its stake in French pharmaceutical group Sanofi or through borrowing.
“If Nestle one day wants to sell, we are ready,” Chairman and Chief Executive Jean-Paul Agon said after L’Oreal released fourth-quarter earnings.
Billionaire Liliane Bettencourt’s death in September has focused attention on how L’Oreal’s founding family and its major shareholder Swiss food group Nestle would manage their stakes.
Investor Daniel Loeb, founder of hedge fund Third Point, has pushed for Nestle to sell its L’Oreal stake among his demands for the Swiss firm to speed a strategy overhaul.
“We have €1.8 billion in cash, we have the Sanofi stake. We are also a very serious and loyal and active shareholder in Sanofi, but in case we will be ready and I’m sure if it was not enough, we have many love letters from banks that have said that they would love to lend us some money.” he added.
Nestle and Sanofi declined to comment.
Shares in L’Oreal, whose brand ambassadors include Helen Mirren, Eva Longoria and Blake Lively, were up 2.4 percent in early trade, among the top gainers on France’s blue-chip CAC-40 index. Nestle shares were up 1.1 percent, while Sanofi was 0.7 percent lower.
“Scarcely a surprise, but this may excite some: An acquisition of the stake by L’Oreal, part-funded by a sale of its own Sanofi stake would be circa 10 percent accretive,” Investec Securities analysts said in a note.
At today’s stock price, L’Oreal’s 9 percent stake in Sanofi is worth more than €7 billion, according to Reuters data.
L’Oreal entered the pharmaceuticals business in 1973 with the purchase of Synthelabo. This was later merged with Elf Aquitaine’s drugs business in the late 1990s, with L’Oreal retaining a stake in the enlarged Sanofi group.
“We see this as no change to the status quo from a L’Oreal perspective. Nor do we expect an imminent about-turn from Nestle, which reiterated its commitment to the L’Oreal holding in September,” Barclays analysts wrote.


Flight rights group takes Ryanair to court over strike compensation

Updated 32 min 44 sec ago
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Flight rights group takes Ryanair to court over strike compensation

  • Ryanair had to cancel around 1 in 6 flights last week due to a walk-out by pilots in five European countries
  • The disruption affected 55,000 travelers

BERLIN: German passenger rights company Flightright is taking Ryanair to court over whether it should pay financial compensation to passengers affected by strikes at Europe’s largest low-cost carrier.
Ryanair had to cancel around 1 in 6 flights on Friday due to a walk-out by pilots in five European countries, disrupting an estimated 55,000 travelers.
The worst affected country was Germany, where 250 flights affected around 42,000 passengers.
EU rules state that passengers can claim monetary compensation of up to €400 for flights within the region for canceled or delayed flights, unless the reason is extraordinary circumstances, such as bad weather.
Strikes have generally fallen under extraordinary circumstances although a ruling by the European Court of Justice in April said that a wildcat strike by staff at German airline TUIfly following a restructuring could not be classed as extraordinary circumstances. Flightright said it believes Ryanair is therefore obliged to pay monetary compensation to customers and so has filed a complaint with a court in Frankfurt in a bid to clarify the rules around strikes.
A spokeswoman for the court said she was aware of the Flightright statement, but that she had not yet seen the complaint.
Ryanair said it fully complies with the European legislation on the matter, known as EU261.
“Under EU261 legislation, no compensation is payable when the union is acting unreasonably and totally beyond the airline’s control. If this was within our control, there would be no cancelations,” a spokesman said.
Passenger rights groups such as Flightright help passengers to claim compensation from airlines under EU261 rules but in exchange for a share of the compensation received.
Many European airlines, including Ryanair, therefore urge passengers to file claims with them directly instead.