Nestlé's participation in L'Oréal has been beneficial to both companies for many years. L'Oréal knows that it has the full support of its two biggest shareholders, Nestlé and the Bettencourt family, whilst Nestlé has benefited from very good returns on its investment over the long term. Moreover, Nestlé and L'Oréal have benefited from their cooperation through two successful joint ventures – Galderma and Laboratoires Innéov as well as joint efforts in research.
Following an agreement between Nestlé and the Bettencourt family signed in 2004, the Parties could not increase their stake in L'Oréal during the lifetime of Mrs. Liliane Bettencourt and six months after that. Since April 29, 2009, the Parties have been free to sell their shares, each of them having conceded the other a first right of refusal until April 28, 2014. After that date, the Parties have been free to offer the shares to any third party.
Following the announcement of the sale for cancellation of 48.5 million L'Oréal shares to L'Oréal on February 11, 2014, Nestlé's ownership in L'Oréal decreased from 29.4% to 23.29%. The Bettencourt family ownership has increased from 30.6% to 33.31%. The number of Nestlé representatives on the Board of Directors of L'Oréal has been adjusted from 3 to 2.
The shareholders' agreement between Nestlé and the Bettencourt family expired on March 21, 2018. On February 15, 2018, Nestlé issued the following press statement: "Our shareholding in L'Oréal continues to be an important investment for us and we remain committed to the company that has given us very good returns over the years. We have full confidence in L'Oréal's management and strategic direction.[…] In order to maintain all available options for the benefit of Nestlé's shareholders, the Board of Directors has decided not to renew this agreement. We do not intend to increase our stake in L'Oréal and are committed to maintaining our constructive relationship with the Bettencourt family."
On December 7, 2021, Nestlé agreed to sell 22.26 million L'Oréal shares to L'Oréal. L'Oréal will cancel the repurchased shares. Following the transaction, Nestlé will own 20.1% of L'Oréal and remains fully supportive of the company's value creation strategy. Nestlé will retain its two positions on the L'Oréal Board of Directors.