Doubts cast over Clarins buy back scheme

Investment advisory group Deminor has written to the French financial authorities to complain about the validity of Clarins proposed share buy back scheme.

The action is believed to have prompted the appointment of a second expert investigation in to the deal, after Deminor executives penned an open letter to the Autorite des Marches Financier (AMF).

The letter, which was sent on July 16, criticising Clarins' proposal, stated that the proposed plan would be 'exceptional in any similar circumstances' and that it does not comply with regulations concerning the independence of Fairness Finance regulations.

Second expert appointed

The investment advisory group believes the appointment of the second expert points to the fact that its concerns over the deal are justified.

Clarins, one of the last major indepedent cosmetics players, wants to achieve greater financial independence to tackle the problem of financial speculation that has damaged the company's stock market performance in recent months.

Fulfilling financial market regulations, the company initiated an independent expert to validate the proposals soon after the proposal was first made public in mid-June.

Generous share buy back proposal

Clarins proposed buy back scheme, which is backed by the CIC Bank, means that the company is offering to buy shares at €55.50 per share for each of the 15.2 million shares that are still outstanding, suggesting a total investment of around €840m.

At the time the offer was due to run from July 18 through to September 5, but that plan has since been postponed following the launch of the second investigation.

Christian Courtins-Clarins, Clarins CEO, says the company would focus on its leading brands, Thierry Mugler, Azzaro and Clarins - forming a key part of the company's renewed direction once the delisting is completed.

Christian Courtin-Clarins currently maintains around 65 per cent of the business, along with his brother Olivier, who is responsible for the company's research and development.

Family maintains voting rights

The family also holds a 78 per cent stake in the voting rights on the company's executive board.

Speculation over the company's future began in March last year, when its founder Jacques Courtin-Clarins died, leaving his son Christian to head up the business.

Although rumors over potential takeover bids from some of the biggest players in the business have abounded, Clarins has maintained that it wants to remain independent, fuelling speculation over its future all the more.