Nestlé Says Remains Committed to L'Oréal

By Noemie Bisserbe

PARIS--Nestlé SA (NESN.VX) said Tuesday it remained committed to its partnership with L'Oréal SA (OR.FR) after it announced plans to sell part of its stake in the French cosmetics company.

"This is not a sign of disengagement or a strategic change," Nestlé President Peter Brabeck-Letmathe told reporters in Paris.

Nestle has agreed to a EUR6.5 billion ($8.88 billion) deal to sell an 8% piece of L'Oréal back to the French cosmetics giant, reducing its stake to 23.29% from 29.4%.

Nestlé has jointly controlled L'Oréal for the past 40 years in partnership with France's Bettencourt Meyers family, heirs of L'Oréal's founder.

Asked whether Nestlé would redistribute part of the stake sale proceeds to its shareholders, Mr. Brabeck-Letmathe said the group's policy was to share profits with shareholders.

L'Oréal Chief Executive Jean-Paul Agon said the group may no longer need to sell its shares in French drug maker Sanofi SA, in which it owns a 9% stake.

Analysts have said that L'Oréal could cash in its stake in Sanofi, currently valued at about EUR9 billion, to buy back Nestlé's stake.

"We are very happy with things as they are for now," Mr. Agon said Tuesday.

-Write to Noemie Bisserbe at [e-mail]

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