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L’Oreal Could Spend 20 Billion Euros on Acquisitions, Exane Says

L’Oreal SA, the world’s largest cosmetics company, has capacity to spend as much as 20 billion euros ($26 billion) on acquisitions to help it avoid being taken over by Nestle SA, analysts at Exane BNP Paribas said.

Fragrance makers Estee Lauder Cos. and Elizabeth Arden Inc. are among the possible targets for Paris-based L’Oreal, analysts Eamonn Ferry, James Bushnell and Jeff Stent wrote in a research note dated yesterday. L’Oreal will have net cash of about 2.7 billion euros by the end of 2012, and owns 9 percent of Sanofi- Aventis SA that it should sell, the analysts said. The stake is worth about 5.8 billion euros at current market values.

Nestle owns about 30 percent of L’Oreal and probably wants to buy the French cosmetics company, the analysts said. Nestle Chief Executive Officer Paul Bulcke said in October that the Swiss food company is “sticking to the status quo” on L’Oreal. The French government and Bettencourt family, which owns about 31 percent of the cosmetics maker, would probably prevent a takeover by Nestle, the Exane analysts said.

L’Oreal is more likely to make acquisitions than repurchase shares with its cash, because a buyback would increase Nestle’s stake, the analysts wrote.

“Big deals have previously not been part of L’Oreal’s M&A DNA, but the chances of one now have increased,” they said.

Stephanie Carson-Parker, a spokeswoman for L’Oreal, declined to comment on the report.

Elizabeth Arden has a market value of $646 million, while Estee Lauder has a capitalization of $15.8 billion.

L’Oreal rose 8 cents to 85.88 euros at 11:48 a.m. in Paris trading, valuing the company at 51.4 billion euros. Exane has a “neutral” recommendation on the stock.

To contact the reporter on this story: Tom Mulier in Geneva at

To contact the editor responsible for this story: Celeste Perri at

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