Publications
Partners
Paris - An ugly battle at beauty icon L'Oreal between Europe's richest woman and her daughter could end up shaping the future of the world's No. 1 cosmetics maker.
As France stands transfixed by lurid claims of dirty campaign cash and tax dodging that have ensnared President Nicolas Sarkozy's government, the 87-year-old heiress to the L'Oreal fortune fears her daughter could let the family-owned business fall into foreign corporate hands.
Losing L'Oreal _ whose Maybelline mascaras, Lancome face creams and Armani perfumes are used by women around the globe - would be a blow to France, a nation as renowned for its beauty secrets as it is determined to remain a global economic player.
Much hinges on the woman set to inherit the century-old company, which has weathered criticism over Nazi ties and stayed friendly with generations of French leaders on the right and left - and may well shrug off this latest storm.
L'Oreal's shares haven't taken a hit, and have in fact risen amid the scandal, which stemmed from a feud between heiress Liliane Bettencourt and her daughter, Francoise Bettencourt Meyers. It erupted into a political affair a month ago over leaks by former Bettencourt employees about the family's fortune.
Suitors
Big shareholders and L'Oreal's workers appear eager to maintain its family-controlled structure, its cosmetics focus - and its Frenchness.
Potential suitors could be Switzerland-based Nestle, which already owns 30% of L'Oreal, and Cincinnati, Ohio-based Procter & Gamble. But analysts say a takeover would be a costly investment even for those large companies, and wouldn't necessarily be a good fit.
"We don't believe it would make sense for Nestle to take over L'Oreal. They are two different businesses. In terms of the combination, we don't see synergies that would explain" a takeover, said Claudia Lenz, analyst for Bank Vontobel in Zurich.
If anything, she said, Nestle might be looking to dump its L'Oreal stake to focus on its food and beverage business.
Procter & Gamble is a key rival to L'Oreal in the beauty products business - a market estimated at some $360bn a year worldwide - and analysts said it could be eyeing a stake, though likely a minority one.
Neither Nestle nor Procter & Gamble would comment on the speculation.
Lenz said L'Oreal looks less susceptible to takeover now than five years ago, when long-serving CEO Lindsay Owen-Jones announced he would step down. Owen-Jones helped transform the company from a France-focused company into an international powerhouse, pushing into Asia and farther into the United States.
The Bettencourt women have been estranged for years, all because of a celebrity photographer with a charming smile. The daughter accuses photographer Francois-Marie Banier of abusing her mother's alleged mental frailty - and bilking the elder heiress out of cash, artworks and other gifts.
Francoise Bettencourt Meyers insists she does not covet the money - she already has billions of her own - but is heartsick to see her mother manipulated by those around her.
The mother has defended the photographer and publicly questioned her daughter's motives. Bettencourt's lawyer describes the daughter as a "57-year-old little girl" seeking the attention of a mother more at ease in the company of a dandy photographer than her only child.
The details of household conversations came out in secret recordings by Bettencourt's ex-butler leaked last month, including one in which the mother seems confused about whether or not she gave an island in the Seychelles to Banier as a gift.
Scandal
The company's origins date to 1909, when Bettencourt's chemist father, Eugene Schueller, invented a hair dye he named Aureale.
After World War II, several L'Oreal executives Schueller hired were accused of Nazi sympathies. Liliane Bettencourt's husband Andre wrote for a Nazi-controlled newspaper, "La Terre Francaise," though later joined the underground Resistance.
The family maintained close ties to the political elite, as Andre Bettencourt worked for Presidents Charles de Gaulle, Georges Pompidou and Francois Mitterrand.
The current scandal includes accusations that Liliane Bettencourt's financial adviser gave envelopes of cash illegally to the treasurer of Sarkozy's conservative party months before his 2007 election. Sarkozy denies the claims and calls them a smear campaign.
Liliane Bettencourt is Europe's richest woman according to Forbes, and one of France's biggest taxpayers.
In a statement last week, she raised concerns about the company's future. "I hope my daughter will not destabilize the group, which my father and I have wanted to be French," she said.
L'Oreal officials would not comment on the legal affairs or speculation about its future. Last week it reported a 13 percent rise in sales in the second quarter after a slump last year linked to the global financial crisis.
CEO Jean-Paul Agon isn't showing public signs of worry. The sales figures "reassure us about our grand strategic choices, and allow us to face the second half with confidence," he said.
Currently the Bettencourt family owns 31% of the company, Nestle 30%, with the rest primarily held by institutional investors and small shareholders.
When Liliane Bettencourt dies, a shareholder agreement stipulates that nothing can be done with the ownership balance for at least six months.
After that, all eyes turn to her daughter.
Machinations
A published writer, Francoise Bettencourt Meyers leads a relatively private, quiet life with her husband and two sons, only one of whom is still in contact with his grandmother.
She insists she and her husband, who sits on L'Oreal's board, are loyal to the company, calling doubts about its future "machinations put in place to try to destabilize us."
"I respect the heritage of my grandfather, who founded it. This heritage was passed on to me by my mother, who passed it on to my children," she recently told Elle magazine.
Bettencourt Meyers is the author of a book on the Greek gods, as well as a massive volume about the Bible intended to bridge gaps between Christians and Jews - a theme that has echoes in her personal life, given her father and grandfathers' past and her marriage to a Jewish man.
L'Oreal employees appear to be sticking by the family and company despite the ups and downs.
"We would like L'Oreal to stay L'Oreal: the number one in its sector, cosmetics," said Manuel Blanco, a L'Oreal employee and general secretary of the CGT union's chemical industry branch.
"I don't know what would happen if a third shareholder takes control ... especially if this third one is coming from the food industry or consumer goods sector, such as Procter & Gamble, and would have a very different strategy from L'Oreal's," he said.
- AP
