The acquisitions business is not a game that can always be beaten with the biggest hand of cash. Sometimes partnerships and future opportunities prove to be of greater value to the seller.
Take the case of Nestlé and L'Oréal, for example. Nestle holds a 29.6 per cent stake in the company, which over the past 12 months has increased in value from around €16 billion to €24 billion, after L'Oréal's share price rocketed up by 50 per cent.
The Swiss company might already have a healthy sum in the bank, but an eight billion euro increase is hard even for this giant to ignore, especially when it is thought to be considering a carefully targeted acquisition or two of its own in the coming months. Coupled with a reassessment of its values, this promise of a windfall has prompted speculation that Nestlé could be looking into selling its stake, according to reports from the FT.
Although nothing has been confirmed, the potential disposal has raised an interesting point about how Nestlé might choose a buyer.
The two companies have a mutually-beneficial history dating back around 40 years. The stability of Nestlé's share has provided L'Oréal with a secure platform for growth over many years and a decision by Nestlé to brush this aside by selling the stake to a third party is likely to cause both businesses some serious disruption around Europe.
With this in mind, Nestlé would be well counselled to adhere to the first refusal pact and sell its stake to L'Oréal before it runs out in April 2014. After this date, Nestlé will have no obligation to sell the stake back to L'Oréal and could end up being put to the open market. There is a chance that a buyer with a particularly strong interest in the stake will pay above the odds, giving Nestlé an even bigger contribution to its acquisition funds. But realistically, the company is highly unlikely to risk damaging the relationship and reputation that it has with L'Oréal in favour of extra money. 
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