Worth it? Fresh blow for L’Oréal as Nestlé move sparks speculation

The future of cosmetics giant L’Oréal looked less than flawless on Thursday, after investor Nestlé decided not to renew a shareholder agreement, opening the door to a potential sale.

Nestlé is committed to the company that has “given us very good returns over the years”. However, the Nespresso and KitKat owner said it won’t raise its 23% investment, worth ¤22.3 billion (£19.8 billion), in the French beauty group. It will let a shareholder pact with the Bettencourt family, also a major L’Oréal stakeholder, lapse. The deal with the Bettencourts was that neither side could raise their stake in L’Oréal until six months after the group’s heiress Liliane Bettencourt was deceased. She died in September.

Today’s update could fuel speculation about Nestlé selling its stake, causing major changes at the business which has been hit by some controversies recently.

L’Oréal hit headlines last month when British beauty blogger Amena Khan (pictured) was selected to front a campaign to great fanfare, only to step down following the discovery of tweets she wrote in 2014, which some branded as “anti-Israel”.

L’Oréal last week said the company was ready to buy back the stake, should Nestlé sell.

Nestlé today forecast modest organic sales growth this year.