L'Oreal CEO says ready to buy out Nestle stake in 2014: paper

PARIS Thu Aug 29, 2013 4:06pm EDT

A logo is seen over the entrance of Cosmetics company L'Oreal building in Paris, August 16, 2013. REUTERS/Christian Hartmann

A logo is seen over the entrance of Cosmetics company L'Oreal building in Paris, August 16, 2013.

Credit: Reuters/Christian Hartmann

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PARIS (Reuters) - L'Oreal (OREP.PA) will be ready to buy Nestle's 29.5 percent stake in the French cosmetics giant next year, French daily Les Echos reported, citing L'Oreal Chief Executive Jean-Paul Agon.

The newspaper quoted Agon as saying L'Oreal would have the means to buy the Swiss food group's holding from April 2014, when a 10-year mutual right of first refusal with L'Oreal's founding Bettencourt family expires, allowing Nestle to sell.

Agon told the paper the French group would be ready to buy Nestle's holding, valued at around 22 billion euros ($29.09 billion), according to a front-page excerpt of Les Echos' Friday edition made available late on Thursday.

Nestle said this week it wanted to keep all options open regarding its L'Oreal stake.

The Bettencourt family said last week it had no plans to sell its 30.5 percent stake in L'Oreal, responding to speculation that the group's shareholder structure could change.

New York brokerage Liberum estimates L'Oreal could buy Nestle's stake if it sold its 9 percent holding in pharmaceuticals maker Sanofi (SASY.PA) and borrowed funds for as much as three times its net debt to earnings before interest, tax, depreciation and amortization.

It estimates L'Oreal could raise as much as 35 billion euros in 2014 for deals or share buy-backs.

"L'Oreal would prefer to buy out Nestle to secure independence," Liberum analyst Pablo Zuanic said.

L'Oreal posted improved profit margins on Thursday and said it had net cash of 572 million euros on its balance sheet at the end of June.

(Reporting by Astrid Wendlandt; editing by Tom Pfeiffer)

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