NEW YORK -- L'Oreal Group's April 14 announcement that it intends to acquire control of Cosmair Inc. USA and three other of its overseas licensees will take the company down a complicated financial route to achieve a simpler management structure.

Since the Fifties, when the New York-based Cosmair was established, the American company has been run by L'Oreal and counted as one of the biggest pieces of the French company's business, with U.S. sales of $1.3 billion last year.

However, L'Oreal does not own Cosmair, holding only a 3.7 percent stake. NestlÄ SA has 70 percent and the family of Liliane Bettencourt, the daughter of L'Oreal's founder, Eugene Schueller, owns most of the remainder.

Bettencourt is the largest shareholder of the parent L'Oreal Group. The Bettencourt family owns 51 percent of Gesparal, a holding company, which in turn owns 51 percent of L'Oreal. Nestle owns the other 49 percent of Gesparal.

The takeover will come in two steps. The Bettencourts will transfer their holdings in Cosmair Inc. USA and Cosmair Canada Inc. to Gesparal, and Nestle will also turn over part of its stake in the two Cosmairs. Gesparal, in turn, will hand over those holdings to L'Oreal in return for L'Oreal stock.

Then L'Oreal will buy the remainder of Nestle's share in the Cosmairs, plus its stake in Lorsa-Fagel of Switzerland and Procasa of Spain.

The deal was structured to maintain the balance of ownership in Gesparal.

No purchase price was given by the company, but analysts in London and Paris estimate the value of the transaction at $2.3 billion. Cosmair USA alone is worth $1.8 billion to $1.9 billion, they estimate.

The transaction, which is expected to go into effect by the end of the year, was aimed at simplifying management by putting all markets under L'Oreal. In the U.S., for instance, Lindsay Owen-Jones, chairman and chief executive officer of L'Oreal, ran Cosmair under a management contract with Nestle.

"If something had ever gone wrong -- which was not the case -- how far would their responsibility or my responsibility have been involved?" Owen-Jones said, pointing out that even though he ran the company, L'Oreal didn't own it.

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