Founding family dilutes L'Oreal stake

FRANCE'S richest person, Liliane Bettencourt, and Swiss foods giant Nestle, have struck a deal to streamline their interests in the world's largest cosmetics company, L'Oreal .

Bettencourt, the 80-year-old daughter of L'Oreal's founder, and her only child, Francoise Bettencourt Meyers, have agreed that L'Oreal will absorb Gasparal, the company through which she and Nestle control the cosmetics group.

The deal also foresees the overhaul of L'Oreal's corporate governance and removal of double voting rights. Shares in L'Oreal eased 0.31% today to e63.80, valuing the group at e43.1bn (£29bn).

Lindsay Owen-Jones, executive chairman of L'Oreal, said he was 'delighted by this agreement, which is extremely favourable to the company, employees, clients and all of its shareholders'.

Clarification of the shareholding structure and improved corporate governance would enhance transparency, he said. But shareholders were apparently cautious after reading the fine print.

Bettencourt, ranked by Forbes magazine as 13th richest in the world, inherited her stake in L'Oreal, now worth e12.7bn, in 1957. For 30 years it has been contained in Gasparal, owned 51% by the Bettencourts and 49% by Nestle. Gasparal has 53.8% of L'Oreal's equity, but 71.7% of its voting rights, rendering it bid-proof and free to pursue a strategy of steady organic growth.

If shareholders approve the deal on 24 April, Bettencourt and her daughter, who both sit on the L'Oreal board, will have 27.5% of L'Oreal and Nestle 26.4%. Both have pledged to keep their shares for five years.