L'Oreal's rumored buyback of Nestle's 29.5 percent stake in the French cosmetics giant looked far from a done deal on Friday, with Jean-Paul Agon, chairman and CEO of L'Oreal, telling CNBC that the ball was in the Swiss food giant's court.
"This is business fiction," he told CNBC Friday. "Nestle is considering its options....we are doing the same."
French daily Les Echos reported on Thursday that L'Oreal was preparing to buy Nestle's stake in the firm next year and cited Agon. However, Agon indicated that the decision now rests with Nestle, adding that L'Oreal had "strong financial resources" to complete such a deal.
The expiry of a 10-year right of first refusal agreement with the Bettencourt family - which owns a large stake in L'Oreal - in April 2014 would make it easier for Nestle to sell.
The French company posted operating profit in line with expectations on Thursday and said it had net cash of 572 million euros on its balance sheet at the end of June.
"We are increasing our profit margins at a record level," Agon said, adding that strong demand from North America was helping sales. He added that next year could be more difficult than 2013 as he expected the strength of the euro to affect future margins.
The firm is working hard to improve the production side of the business, he said, and added that the supply chain had been improving. The recent acquisition in China of skincare firm Magic Holdings was a "huge opportunity". Agon said he was looking to expand the maker of cosmetic facial masks' operations further in Asia and then hopefully the rest of the world.