PARIS — L’Oréal stock continued climbing Monday after its chairman and chief executive officer Jean-Paul Agon neither confirmed nor denied the French beauty giant might buy back Nestlé’s 29.3 percent stake in the company.
L’Oréal closed up 1.5 percent on the Paris Bourse to 128.20 euros, or $169.10 at current exchange.
Agon made his remarks Friday at a financial analyst meeting at L’Oréal headquarters in Clichy, a Paris suburb, where he reviewed first-half results and clarified information in a Les Echos newspaper story. Agon refuted he had said L’Oréal wished to buy Nestlé’s stake — which is valued at 22 billion euros, or $29 billion.
“All I said was…that we have considerable financial wherewithal because we have positive cash and 9 percent of Sanofi,” he explained, referring to the French pharmaceutical concern whose 2012 sales were 34.95 billion euros, or $44.94 billion at average exchange.
Agon also said L’Oréal has cash to be used. As of June 30, the company’s net cash amounted to 572 million euros, or $735.5 million.
“We will see what the opportunities are to use it, but I am confident there will be opportunities,” he said. “We’ve always said that our stake in Sanofi was financial, not strategic. We could use it if an opportunity were to arise.”
A shareholder agreement exists including stipulations that neither Nestlé nor the Bettencourt family, which owns 30.5 percent of L’Oréal, can increase its stake in L’Oréal during the lifetime of Liliane Bettencourt, the daughter of the company’s founder who is now 90, and six months after her death. However, the parties are free to sell their shares, each of them having conceded the other a first right of refusal until April 29, 2014. Following that date, the parties may offer the stakes to any third party.
As reported, there was more buzz about Nestlé’s share in L’Oréal in late August, when Nestlé chairman Peter Brabeck-Letmathe told Swiss newspaper Handelszeitung that the company would not extend its 10-year right of first refusal agreement with the Bettencourts. He added Nestlé wishes to keep all its options open, including the status quo.
L’Oréal’s first-half net profits rose 5.2 percent to 1.71 billion euros, or $2.25 billion. Company sales increased 4.7 percent to 11.74 euros, or $15.42 billion.
“Overall, [first-half 2013] supports our belief that [full-year 2013] should be a good but not a great year for L’Oréal, with like-for-like, top-line growth [of 5.5 percent], operating margin growth [of 35 basis points] and [earnings-per-share growth of 3 percent] being average, at best, versus its peer group,” said Andrew Wood, an analyst at Sanford C. Bernstein & Co., in a research note.
He added L’Oréal stock is somewhat inflated due to the “hope/expectation that Nestlé will sell its stake in L’Oréal and that L’Oréal will undertake a mega-buyback of the shares, which would be significantly accretive.”
L’Oréal stock closed Friday up 3.2 percent to 126.25 euros, or $166.47 at current exchange.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
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Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast