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.


Egypt and Russia sign 50-year industrial zone agreement

Updated 24 May 2018
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Egypt and Russia sign 50-year industrial zone agreement

CAIRO: Egypt and Russia signed a 50-year agreement on Wednesday to build a sprawling industrial zone that Egypt hopes will attract up to $7 billion in investments.
The 5.25 million square meter (57 million square foot) industrial zone will be located east of Port Said in the new Suez Canal Economic Zone, a mega project launched by President Abdel Fattah El-Sisi.
The plan aims to create an international hub for manufacturers with easy access for exporting goods to African and European markets.
The construction of the first phase of the Russian industrial zone is expected to cost around $190 million, according to a statement from Egypt’s trade ministry announcing the signing of the agreement.
The statement said the new industrial zone could attract up to $7 billion in investments, but did not say how the figure was calculated.
Total trade between Egypt and Russia in 2017 amounted to $6.7 billion, state news agency MENA reported in February, with Cairo’s exports to Moscow reaching $505 million.
Egypt is on a drive to lure back investors who fled following the 2011 uprising with a slew of economic reforms and incentives the government hopes will draw fresh capital and kickstart growth.