L'Oreal to divest Galderma stake to Nestle

French cosmetics major L'Oreal yesterday said that it had signed an agreement for selling its stake in dermatology joint venture Galderma to Nestle as part of its $8.88-billion deal to buy back a part of its own shares from the Swiss food giant.

Created in 1981, Lausanne, Switzerland-based Galderma is an equal joint venture between L'Oréal and Nestlé. The company had sales of $2.2 billion last year.

Nestle, which holds 29.3 per cent stake in L'Oreal, had last month agreed to sell an 8-per cent stake or 48.5 million shares in L'Oréal back to the Clichy, France-based cosmetics giant for €6 billion ($8.88 billion) (See: L'Oréal to buy back 8% stake from Nestle for $8.88 bn).

Under the terms of the deal, Nestlé will sell 27.3 million L'Oreal shares for €3.4 billion in cash and another 21.2 million shares in exchange for a 50-per cent stake in Galderma worth €2.6 billion.

This Galderma share purchase agreement was signed on Friday, but the deal has to be approved by regulators, L'Oreal said in a statement.

Post closing, Nestlé plans to create a new subsidiary called Nestlé Skin Health SA. Galderma's will be run by its existing management.

Galderma focuses on acne, pigmentary disorders, skin cancer, rosacea, psoriasis and steroid-responsive dermatoses, onychomycosis and skin senescence.

The company's major products are Azzalure, an anti-ageing drug manufactured by Ipsen SA, which Galderma markets. The drug is in direct competition to multi-specialty health care products maker Allergan's Botox.

Cetaphil comprises a range of cleansing moisturising and UV protective products for compromised and sensitive skin. Clobex is used in the treatment of inflammatory dermatoses such as psoriasis or atopic dermatitis.

Galderma has over 3,000 employees in 31 affiliates around the world with three manufacturing sites and the largest R&D facility in the world dedicated exclusively to dermatology.