However, should a bidding war take place between major players including L'Oreal and Unilever, an eventual acquisition price of $144 per share would "not be out of the question," Wood continued. Current financing rates remain low at around 2 percent, and an acquisition financed purely through debt would still be "nicely accretive" to Unilever's earnings per share by 9 percent, L'Oreal's earnings per share by 16 percent and P&G's earnings per share by 6 percent.
L'Oreal could also sell its 9.15 percent stake in Sanofi SA (ADR) SNY, which is worth north of $11 billion, and would lower its net debt/EBITDA multiple to 4.6x, which would be good enough to avoid the need to raise equity to finance the deal.Before investors jump to any conclusions it is equally important to consider if the Lauder family even wants to sell the company, the analyst stated. The Lauder family owns more than 40 percent of all outstanding shares but controls 87 percent of the beauty company's vote so any eventual sale will be the family's decision.
"We have not seen or heard any indication that the family has been interested in selling the company over the years," Wood wrote.
Bottom line, Estee Lauder is also facing some challenges through lost sales in closing department stores and brand fragmentation. Perhaps these challenges may prompt the Lauder family to change their mind "a little."
Bernstein still rates Estee Lauder at Outperform with an unchanged price target at $117.Related Links: Estee Lauder Upgraded After Q4 Report Shows Higher Sales, Lower Costs Jefferies Sees Beauties And Beasts In The Modern Cosmetic Space _______ Image Credit: By Pear285 at English Wikipedia - Transferred from en.wikipedia to Commons., CC0, via Wikimedia Commons
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