PARIS -- Lindsay Owen-Jones, chairman and chief executive officer of L'Oreal, said Thursday that the group would take over its U.S. licensee, Cosmair Inc., thus ending an awkward arrangement that has endured since Cosmair was founded back in the...
PARIS -- Lindsay Owen-Jones, chairman and chief executive officer of L'Oreal, said Thursday that the group would take over its U.S. licensee, Cosmair Inc., thus ending an awkward arrangement that has endured since Cosmair was founded back in the Fifties.
L'Oreal's takeover of Cosmair, which had 1993 sales of more than $1.3 billion, is part of a plan to put the Paris-based group in control of all its major markets throughout the world. In addition to the U.S. company, the move includes Cosmair Canada, Lorsa-Fagel of Switzerland and Procasa of Spain.
The Cosmair brands include some of the best-known names in the beauty business: Lancome, and the Ralph Lauren, Giorgio Armani and Paloma Picasso fragrances at the prestige level, and Plenitude treatment products and Gloria Vanderbilt in the mass market.
No value was given for the complicated transaction, which will involve both cash and an exchange of L'Oreal stock among L'Oreal and its main shareholders. L'Oreal is controlled by the Gesparal holding company, of which the Bettencourt family owns 51 percent and Nestle SA 49 percent.
That's what has made the long-standing arrangement awkward much of the time. Although Cosmair was the biggest piece of L'Oreal's business, it wasn't directly owned by L'Oreal. If L'Oreal wanted to invest a lot of money in a Plenitudes launch, for example, it would first have to check with Nestle and the Bettencourts.
During a meeting at L'Oreal's headquarters outside Paris, Owen-Jones said the deal had been carefully crafted to preserve the balance of ownership between the Bettencourts and Nestle.
Owen-Jones told security analysts that the new arrangement, set to go into effect by the end of this year, would give L'Oreal a surer hand in running its businesses around the world.
Until now, L'Oreal has had management control of Cosmair, for example, but could not take major actions without consulting Cosmair's majority owners -- Nestle SA, which has 76 percent of the American company, and the Bettencourt family, which owned most of the remainder. L'Oreal had only 3.7 percent.
"I do not expect this to change our ambitions for Cosmair," Owen-Jones said, emphasizing that the move did not indicate any weakness in the American operation.
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