"It seems that the Rothschild family is somewhat unwilling to accept their losses, Your Highness."
"What do you mean, Ms. Weber?"
After personal assistant Zhang Junning handed Ashley Weber's order to Barron, he walked to the window, looked at the scenery in the yard that was already covered with green, and asked casually.
"Someone's investigating our company's financial transactions. If nothing unexpected happens, it's definitely the Rothschilds."
"Are you sure?"
Ashley's matter-of-fact voice came over the phone.
"Every indication points to them. Don't forget, Your Highness, I have my own channels. I wouldn't make a mistake with this."
"That's understandable. After all, they've lost a lot of money before. They at least need to understand if you're doing this for some bigger purpose. If it were me, I'd investigate that first."
"Let's not talk about that for now. Nestlé has already been dealt with..."
Hearing Ashley's words, he smiled and said,
"That's great news. Well done."
Prior to this, Ashley Webb had helped Barron negotiate with Nestlé, hoping to acquire their 29.44% stake in L'Oréal through an equity swap.
This was originally a difficult matter, given Nestlé's alliance with L'Oréal for over twenty years.
However, this year, the subprime mortgage crisis has impacted Europe and the US, leading to high inflation and a decline in purchasing power. L'Oréal's first-quarter financial report wasn't good, and there were reports that they were preparing to lower their profit forecasts for this year. This caused their stock price to plummet from over €100 at the beginning of the year to around €70 at this time, a drop of nearly 30%.
At Barron's request, Ashley Webb offered Nestlé a very tempting offer: if L'Oréal's share price fell below €120 per share over the next eight years, they would have the right to purchase Nestlé's shares at €120 per share at any time. If L'Oréal's share price rose above €120 per share over the next eight years, they would have the right to purchase Nestlé's shares at the then-current price.
Of course, the prerequisite for this was that if they purchased Nestlé's L'Oréal shares before April 2014, they would have needed the Bettencourt family's permission. This was because, according to a previous agreement between Nestlé and the Bettencourt family, the other party had first right of first refusal if either party sold its L'Oréal shares before 2014.
If Barron and his team purchased Nestlé's L'Oréal shares after the expiration of the agreement in April 2014, they could have completed the transaction directly without further confirmation from the Bettencourt family.
This agreement meant that Barron guaranteed Nestlé a minimum price of €120 per share for their L'Oréal shares.
Considering L'Oréal's current share price of around €70, a price of €120 per share represented a premium of over 70%!
Even compared to L'Oréal's share price of around €100 at the beginning of the same year, this represented a 20% premium—L'Oréal's share price had never reached €120 per share.
Furthermore, even if L'Oréal's share price actually rises above €120 per share over the next eight years, Nestlé can still sell its L'Oréal shares to Baron at a higher price.
Simply put, this is a guaranteed stock option agreement far higher than the current L'Oréal share price.
All Nestlé needs to do is confirm the sale of its L'Oréal shares to Baron and his team.
Either way, it's a win-win for them. Of course, this agreement wasn't a loss for Barron—it seemed like he'd have to pay a higher price to acquire L'Oréal shares, but the key was that L'Oréal's stock price was currently very low, and he couldn't afford to buy
any. Yes, they had secretly bought L'Oréal shares on the secondary market, but at best, they could only make sporadic purchases. Consider that
the Bettencourt family and Nestlé alone hold over 60% of L'Oréal's total shares.
Buying shares from the Bettencourt family was out of the question. Even if there were internal conflicts within the family, buying their shares would be even more difficult than buying from Nestlé.
Furthermore, the agreement between the Bettencourt family and Nestlé restricting the sale of L'Oréal shares restricted both parties. Even if Barron had been able to buy the Bettencourt family's L'Oréal shares before 2014, he would have needed Nestlé's permission.
Furthermore, how could he have possibly purchased shares from them at the original price? A premium is essential—just like when EDF bought Anglo Energy, it paid a 35% premium!
Baron also knew that in his previous life, the Bettencourt family repurchased 8% of L'Oréal from Nestlé in 2014 for €6.5 billion. At the time, L'Oréal's market capitalization was over €82 billion, and its share price was around €135.
Five years later, in 2021, L'Oréal's market capitalization had reached over €223 billion.
Even if he had purchased Nestlé's L'Oréal shares before that at €120 per share, the corresponding market capitalization would have been just over €72 billion, still a good deal.
Furthermore, L'Oréal's position in the beauty industry is crucial for Gucci-Hermès.
By acquiring L'Oréal, Gucci-Hermès could instantly address its shortcomings in the beauty sector.
At least now that the agreement with Nestlé has been signed, it's certain that their L'Oréal holdings will ultimately belong to Baron. Even if the Bettencourt family wants to purchase Nestlé's shares, this agreement prevents them from selling.
This means that Nestlé's 29.44% stake in L'Oréal is practically guaranteed to be theirs.
Combined with the L'Oréal shares they secretly purchased on the secondary market, Baron's stake in L'Oréal will surpass the Bettencourt family's, making him the largest shareholder.
Of course, if they can also acquire the Bettencourt family's L'Oréal shares, they will be able to fully privatize L'Oréal.
Prior to this, Gucci-Hermès Group is preparing to complete the privatization of Hermès.
Affected by the subprime mortgage crisis, Hermès' stock price has also fallen accordingly, but it's still early. Once the subprime mortgage crisis fully erupts and affects the European stock market, they will begin to increase their holdings of Hermès shares in the secondary market.
In addition, some members of the Hermès family will also be affected by the subprime mortgage crisis and may consider selling their shares in Hermès. At that time, Gucci-Hermès Group will also acquire them.
Ultimately, together with the remaining Hermès family shareholders, they will complete the privatization of Hermès and delist it.
After all, Hermès went public mainly to facilitate financing, but Gucci-Hermès Group has the support of Barron and is not short of funds. Their income is relatively stable, so there is no need to go public.