GENEVA (AP) — Swiss food and drink group Nestle is creating a new unit for medical skin treatments via a deal that reduces its stake in French cosmetics company L'Oreal.
The Vevey, Switzerland-based company said Tuesday it would take full ownership of Swiss dermatology pharmaceuticals company Galderma, which had been a 50/50 joint venture with L'Oreal. It will use Galderma's management to form a new unit called Nestle Skin Health SA.
Nestle is striving to reposition its food-and-beverage business more into the nutrition and wellness fields. Galderma's business fits in that new mold.
"The future of skin health and dermatology is a buoyant market globally," Nestle CEO Paul Bulcke said.
Galderma, a Swiss company created in 1981, sells products in 70 countries that treat skin diseases including acne, psoriasis and cancer. The deal is subject to regulatory approval.
As part of the complicated deal, which is valued at 6.5 billion euros ($8.8 billion), Nestle's stake in L'Oreal will fall from 29.4 percent to 23.3 percent. L'Oreal will buy back 48.5 million of its own shares and then cancel them.
Nestle chairman Peter Brabeck-Letmathe said the deal did not mean the company was abandoning its involvement in L'Oreal.
"Nestle will continue to support the development of L'Oreal as in the past 40 years," he said.
Following the share buyback and cancellation, the Bettencourt Meyers family's stake in L'Oreal will increase from 30.6 percent to 33.3 percent.