Nestle's Stake in L'Oreal Just Isn't Worth It

Nestle SA has met activist investor Dan Loeb more than half way. The company has announced a 20 billion Swiss franc ($20.8 billion) share buyback, shown a willingness to rejig its portfolio and will look at ways to lift the margin.

As Gadfly has argued, a buyback was always an easy way to address Loeb's calls for change, and one that the company could comfortably afford. Nestle says it has been examining its capital structure since the beginning of this year. But news this week of Loeb's letter to shareholders probably influenced the timing of Nestle's announcement.