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.


China files WTO challenge to US tariffs on solar panels

Updated 15 August 2018
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China files WTO challenge to US tariffs on solar panels

  • The 30 percent tariffs announced in January improperly help US producers in violation of WTO rules, China’s commerce ministry said
  • China has tried to portray itself as a defender of the WTO-based trading system

BEIJING: China says it is challenging a US tariff hike on solar panels before the World Trade Organization, adding to its sprawling conflicts with President Donald Trump over trade and technology.
The 30 percent tariffs announced in January improperly help US producers in violation of WTO rules, the Commerce Ministry said. It said a formal complaint was filed Tuesday with the WTO in Geneva.
The solar duties are separate from tariff hikes imposed by the Trump administration starting in July on Chinese imports in response to complaints Beijing steals or pressures companies to hand over technology.
The duties also apply to imports of solar cells and modules from Europe, Canada, Mexico and South Korea. That strained relations with US allies.
The Trump administration has defended the solar tariffs as necessary to protect American producers, saying import prices were unfairly low due to subsidies and other improper support.
Washington took action under a 1974 US law instead of through the WTO. That led to complaints it was undermining the global trade body. US officials say such action is necessary because the WTO lacks the ability to address Chinese trade tactics.
China has tried to portray itself as a defender of the WTO-based trading system. It has attempted to recruit European and other governments as allies against Washington, but they echo US complaints about Chinese market barriers and industrial policy.
The European Union filed its own WTO complaint in June against Chinese technology policies it said violate Beijing’s free-trade commitments.
The US solar action “seriously damaged China’s trade interests” and “also affects the seriousness and authority of WTO rules,” said a Commerce Ministry statement.
WTO complaints begin with negotiations between parties to the dispute. If those fail, the case moves to a panel of experts who can decide whether the trade controls are improper.
In their technology dispute, Washington imposed 25 percent duties on $34 billion of Chinese goods it said benefit from improper industrial policies. Beijing responded with similar penalties.
Another round of US tariff hikes on $16 billion of Chinese goods is due to take effect Aug. 23. Beijing says it will retaliate.
Earlier, Beijing filed a separate WTO challenge on July 16 to Trump’s proposal for yet another round of increases that would add 25 percent import duties on an additional $200 billion of Chinese goods.