L'Oreal will buy 8% of its capital for €6.5 billion from Swiss consumer goods group Nestle, boosting the French cosmetics group's earnings per share by more than 5%.

The deal will cut Nestle's stake in L'Oreal to 23.29% from 29.4% while the Bettencourt Meyers family's stake in L'Oréal will increase from 30.6% to 33.31%, the company said in a statement.

Nestle said it would use the cash proceeds to launch a share buyback, without disclosing details.

The price per L'Oreal share retained for this transaction is €124.48, corresponding to the average of its closing prices between November 11, 2013 and February 10, 2014.

All the shares bought back by L'Oréal will be cancelled.

In order to reflect the change of Nestle's stake in L'Oreal's governance, the number of Nestle representatives on L'Oreal's board of directors will be cut from three to two directors.