Nestle Step Toward L’Oreal Exit Spurs Dreams of Deals: Real M&A

Nestle SA loosening its grip on L’Oreal SA is prompting speculation that the Swiss food maker may eventually sell more of its remaining stake of about $22 billion to generate funds for deals.

Nestle is selling 8 percent of its holding in L’Oreal in exchange for $4.6 billion in cash and L’Oreal’s stake in the companies’ Galderma skin-care joint venture. The move is probably just the first step toward eventually disposing of its remaining L’Oreal position, valued yesterday at about $22 billion, which would give Nestle more firepower for acquisitions, said Gamco Investors Inc. Nestle already had $6.7 billion in cash before the stake sale, according to data compiled by Bloomberg.