Sanofi says might make sense to buy back L'Oreal's $12 billion stake

PARIS/LONDON (Reuters) - Repurchasing L'Oreal's (OR.PA) 9 percent stake in Sanofi (SAN.PA) might make sense for the French drugmaker if the $12 billion holding is put up for sale, Sanofi's chief executive said on Friday.

Chris Viehbacher told an investor conference the group had the resources to do "opportunistic" share buybacks, as well as making bolt-on acquisitions and potentially increasing its stake in U.S. biotech firm Regeneron Pharmaceuticals (REGN).

Speculation over the fate of L'Oreal's stake in Sanofi has been fuelled by comments from L'Oreal's CEO, who said last month that the cosmetics company could buy back the 23-billion-euro ($30-billion) stake Nestle holds in it if L'Oreal in turn sold the 9-billion-euro stake it owns in Sanofi.

The comments have weighed on Sanofi shares, already dragged down by disappointing quarterly results, but some analysts say the drugmaker could use the opportunity to repurchase the shares with cheap debt, thereby boosting its earnings.

Asked about his potential interest in buying back L'Oreal's stake, Viehbacher said it was difficult to comment because the issue was highly conditional.

"We certainly have cash flow to do some things," he told a Bank of America Merrill Lynch healthcare conference in London.

"Whether we would intervene in that or not is going to be a function of - if it does happen - what at that given point in time is the best use of capital. It may well be opportune to have a look at it."

More generally, Viehbacher said he did not exclude other share buybacks, but said these would depend on opportunities for acquisitions.

He said Sanofi could also look at raising its stake in Regeneron to as much as 30 percent. Sanofi holds about 16 percent of Regeneron and said in February it has the right to increase this to a maximum 30 percent under its decade-long partnership with Regeneron.

"The Regeneron relationship has become extremely productive for us," Viehbacher said. "Over time, it could well make sense to build our stake up to 30 percent. How fast we do that, whether or not we do that is a function of a number of different factors - but it is a bulky chunk of money to use."

Regeneron's market value is about $27 billion.

(Reporting by Natalie Huet and Ben Hirschler; Editing by Louise Ireland)