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Nestlé (NESN) trims L'Oreal (OR) stake in an €8.9bn deal

By Adrian Holliday

08:40, 8 December 2021

Photo of assorted chocolate bars made by Nestlé
Picture of Nestlé chocolate brands – Photo: Shutterstock

Nestlé (NESN) is set to trim its stake in L’Oreal (OR) from 23.3% to 20.1% in an €8.9bn ($10bn) buyback deal for the French cosmetics company. L’Oreal will pay €400 per share with a mixture of cash and debt.

Nestlé – which controls a wide range of brands from S Pellegrino to Nespresso and Purina – has been expected to sell shares back to L’Oreal for some time. The fit and feel of L’Oreal within the Nestlé brand stable have been subject to much scrutiny over the years as there is little common ground between the two companies.

No board change below the skin

In a release to the market this morning, Nestlé said it remained “fully supportive” of L’Oreal’s value creation strategy and will keep its two positions on L’Oréal’s board of directors.

Meanwhile, Nestlé says it will replace its existing share buyback program with a new plan expected to commence on 3 January 2022. “Under this new program, Nestlé plans to repurchase CHF 20bn [$21.6bn] of its shares over the period 2022 to 2024.” The company expects to buy around CHF 10bn of shares in the first twelve months of the scheme.


39,635.55 Price
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Spread 106.00


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+1.760% 1D Chg, %
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Oil - Crude

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Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 22:00 (UTC)
Spread 0.01168

Nestlé shares opened at CHF 123.22 this morning in Zurich, up 1.70% on the previous close. A little after 09:00 CET (UTC+1), they were trading at around CHF 124.

The deal means the Bettencourt Meyers family will see their L’Oreal stake climb from 33.3% to 34.7%. L’Oreal shares were up 1.2% this morning in Paris at €430.10. L’Oreal’s stable of brands includes Garnier and Maybelline.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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