You read that correctly. Nestle owns 29% of L’Oreal (LRLCY), the world’s largest cosmetics company. It first invested in L’Oreal in 1974 and has been involved ever since. Nestle is currently in a deal with the Bettencourt family which requires each party to offer shares to the other before selling. But in April 2014, that deal will expire.
Any sale of Nestle’s stake would generate a huge asking price, which it would then use for share repurchases, etc.
While Warren Buffett might be interested, the obvious candidate to buy these shares is L’Oreal itself.
In addition to a ton of cash, it also owns 9% of drug company Sanofi (SNY). Analysts think a SNY deal to buy its stake from L’Oreal is a foregone conclusion, and I’m inclined to agree. If that happens, L’Oreal would have almost 11 million euros to partially finance the purchase, with debt taking up the balance.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.