L'Oreal, the world's biggest cosmetics group, said it was open to a strategic acquisition, a day after unveiling results at the top end of expectations and a 500 million euro ($669 million) share buyback.
Chief executive Jean-Paul Agon said on Tuesday the French company had the "means and the guts to do it (takeover deal)", helped by a "war chest" - the company has 1.575 billion euros cash before the planned share buyback.
Agon also told a news conference he expected the global cosmetics market to achieve "growth close to that of 2012" this year and the maker of Lancome creams and Garnier shampoo aimed to outperform the market and increase profit and sales.
L'Oreal shares were up 4.3 percent on Tuesday morning, to be the top blue-chip riser in Europe.
On Monday after the market closed, L'Oreal posted 2012 operating profit of 3.70 billion euros, against an average estimate of 3.66 billion in a Thomson Reuters I/B/E/S poll.
Full-year revenue of 22.5 billion euros, compared with a forecast for 22.3 billion. Its operating margin rose to 16.5 percent from 16.2 percent in 2011.
"Most regions/businesses slightly over-delivered versus expectations," Sanford C. Bernstein analyst Andrew Wood said in a note, adding the luxury business had under performed.
"Despite lower than expected gross margins, L'Oreal delivered good operating margin growth driven by a big cut to advertising and promotion. As expected, for 2013 management gave generic guidance of growth faster than its markets, with sales and profit growth."
The buyback was a "positive surprise," he said.
L'Oreal also spent about 500 million euros buying back its shares last year following a break since 2008.