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Family business roundup: Espirito Santo Group, Mori Trust, L'Oreal, Rottapharm Madaus

By Michael Finnigan

Espirito Santo Group fears trigger stock sell off; Mori Trust meets increased tourism with new hotels; Rottapharm Madaus scrap IPO; L’Oréal buys back shares from Nestlé.

Espirito Santo Group fears trigger stock sell off

Share prices at Portugal’s largest listed bank fell more than 17% on Thursday after parent company Espirito Santo International (ESI) missed debt payments “to a few clients”. 

Trading in Banco Espirito Santo (BES) was suspended amid growing concerns that “accounting irregularities” at the parent company could cause a further slide in share prices.

The Espirito Santo family has controlled the bank for most of its history but a board decision on July 5 confirmed that the founder’s great grandson, CEO Ricardo Salgado, would be replaced.

Two sources familiar with the situation said on Wednesday that the family is considering swapping debt for equity and could ask for more time to repay its balance, according to media reports.

In the past month, shares in BES have lost 54% of their value, while the bank’s woes have dragged stocks in Portugal down 1%.

Portugal’s government has €6 billion in available funding that it could use to stabilise the 94-year-old lender.

BES has a capital buffer of €2.1 billion above the minimum regulatory level, but aimed to raise €1.04 billion last month. 

Mori Trust meets increased tourism with new hotels

Family-owned Japanese hotelier Mori Trust is to expand its operations as a result of increased tourism.

Second-generation managing director Miwako Date, the daughter of Japan’s fourth richest man Akira Mori, said the firm was considering the development of several new resorts in Kyoto and Tokyo, and the renovation of several others across Japan.

“It’s good timing [for hotel investments],” Date said in an interview with Bloomberg. “We are also at a point where we have a better view of where to allocate future investment.”

According to the Japan Tourism Agency, tourist spending in the country has risen by 5% since 2013, reaching 20.6 trillion yen ( €150 billion). 

Rottapharm Madaus scrap IPO

One of the year’s largest health-care public offerings has been abandoned after Italian pharmaceuticals firm Rottapharm failed to find buyers at its targeted price.

The Rovati family, which owns 100% of Rottapharm through its holding firm Fidim, pulled back on a plan to sell shares to the public for the second time in two years, after failing to reach their anticipated valuation.

More than 50 million shares were planned to be sold throughout the day, equating to 25% of capital, as the Rovati family hoped to reduce debt and make acquisitions.

“The conditions have not been met for the execution of a transaction that reflects the current intrinsic value of thecompany, also in light of the unfavorable Italian and international market conditions,” the drug maker said in a company statement.

Rottapharm, founded in 1961, had sales of €536 million in 2013. The Italian firm employs 1,807 people across 90 countries.

L’Oréal buys back shares from Nestlé

L’Oréal has finalised the buyback of an 8% stake in the cosmetics firm from confectionary firm Nestlé, boosting the firm’s earning per share by more than 5%.

As a part of the deal, Liliane Bettencourt, daughter of L’Oréal founder Eugène Schueller, saw her family holding in L’Oréal increase from 30.6% to 33.31%. 

The French heiress’s fortune rose by €2.93 billion, according to today’s share prices, making her the second wealthiest woman in the world.

L’Oréal’s available cash financed the buyback. The deal saw the disposal of its 50% stake in dermatology company Galderma to Nestlé.

Liliane Bettencourt, who suffers from dementia, is no longer involved in the running of the cosmetics company after a 2011 legal battle with her daughter, Françoise Bettencourt Meyers, found she was too unwell to manage the firm. 

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