Byline: Sarah Raper

PARIS — Last week a senior executive at Sanofi told financial analysts that the French pharmaceuticals and beauty company might eventually sell its cosmetics division, including Yves Saint Laurent.
It should have been a nonevent — both the financial community and Paris cosmetics executives have long believed that Sanofi would one day get out of the beauty business, and Sanofi managers privately have said as much. But it was the first time the company has made a public statement about a potential sell-off, and all the signs are there that it is indeed significant.
Insiders at Sanofi say chairman Jean-Francois Dehecq chewed out Jean-Paul Leon, the director in charge of administration and finance, who made the comment at a conference organized by the French bank Credit Commercial de France on Sept. 4.
Company press officers raced to issue “clarifications,” specifying that a beauty sale “could only be considered at a time when Sanofi would have an opportunity to make a major acquisition in its pharmaceutical business that would make such a transaction necessary.”
Meanwhile, executives in the cosmetics industry here have been buzzing about the news, which was covered by all the major French business papers.
YSL chief Pierre Berge said Thursday that he had not been officially notified of any plans to sell. “Today, to my knowledge, YSL is not for sale. But if it is put up for sale, I will take care of it. Yves Saint Laurent and I have both moral and veto rights in this affair.” Analysts don’t really expect Sanofi to rush to shed any beauty brands, with the exception of subsidiary Nina Ricci, held jointly (Sanofi has 56.8 percent of the capital) with the founding family.
Sanofi has confirmed Ricci is for sale.
Analysts say that the most Sanofi could hope to get today for the whole lot of fragrance and beauty brands (Oscar de la Renta, Van Cleef & Arpels, Roger & Gallet, Krizia and Fendi, in addition to YSL’s beauty and fashion business) would be $500 million, well below the book value of the brands, which had sales last year of $630 million (3.8 billion francs). The 1993 deal for YSL valued that company alone at some $600 million (3.6 billion francs).
“I don’t expect them to sell the beauty brands quickly because I don’t really believe that they are going to make such a big pharmaceuticals acquisition that they would be forced to sell,” said one Paris analyst.
As for Nina Ricci, which posted losses of $15 million (89 million francs) on sales of $183 million (1.1 billion francs), the investment bank Lazard Freres is shopping it around.
Sources say that the family-owned Puig group of Barcelona, which includes Paco Rabanne fashion and fragrances, offered $117 million (700 million francs) for Ricci earlier this summer, but that offer was rejected.
Ricci’s chairman Gilles Fuchs confirmed in a fax that Rabanne had made an offer but said that “the amount involved was substantially higher than that.”
Rabanne president Mariano Puig declined to comment.
Although Sanofi holds the majority of the capital, the Fuchs family retains the majority of voting rights in Ricci. However, under clauses in their contract, management responsibility will revert from the family to Sanofi at the end of the year because Ricci has failed to meet specified minimal profit requirements.

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