Project for Strategic Agreement between L’Oréal and PPR regarding Yves Saint Laurent Beauté

Following the authorization of its Board of Directors which met on 23 rd January 2008, L'Oréal has, this same day, made a firm offer to PPR to:

- Acquire the shares of YSL Beauté Holding including the Roger&Gallet brand, for 1,150 million euros in terms of enterprise value,
- Obtain an exclusive and very long-term worldwide licence for the use of the Yves Saint Laurent and Boucheron brands in the category of perfumes and cosmetics, under conditions conforming to usual market practice,
- Take over the licences for the Stella McCartney, Oscar de la Renta and Ermenegildo Zegna brands, in the category of perfumes and cosmetics.

On the basis of this offer, PPR has granted exclusive negotiation rights to L'Oréal.

YSL Beauté reached sales of around 630 million euros in 2006 with its Yves Saint Laurent brand as well as with its Roger&Gallet, Boucheron, Stella McCartney, Oscar de la Renta and Ermenegildo Zegna brands.

- Mr Jean-Paul Agon, CEO of L'Oréal, said: "This proposed agreement represents a great opportunity for L'Oréal and its Luxury Products Division. Yves Saint Laurent is a mythical French luxury brand. It is admired the world over and is particularly complementary with our current brands. We are convinced that its integration into our Luxury Products Division would speed up its development. This strategic agreement will reinforce our position in the luxury cosmetics market".

- François-Henri Pinault, PPR Chairman & CEO, said: "With t his strategic agreement with the world leader in cosmetics, Gucci Group gives YSL Beauté the opportunity to take full advantage of its upside potential. It also enables the Yves Saint Laurent brand, in the field of beauty, to fully align its ambition with its worldwide reputation. Yves Saint Laurent would thus boost its position as a great luxury brand. With its expertise and knowledge of international markets, L'Oréal would be able to continue and step up the work already achieved to date. L'Oréal would also offer a unique development platform for the Roger & Gallet, Boucheron, Stella McCartney, Oscar de la Renta and Zegna brands. With this projected agreement, PPR reasserts its ambition to bolster the development of the Gucci Group's brands."

The agreement should be signed in the coming weeks, once the institutions representing PPR's staff have been consulted.
This operation will be submitted for approval by the appropriate authorities.

"This news release does not constitute an offer to sell, or a solicitation of an offer to buy L'Oréal shares. If you wish to obtain more comprehensive information about L'Oréal, please refer to the public documents registered in France with the Autorité des Marchés Financiers also available in English on our Internet site www.loreal-finance.com.
This news release may contain some forward-looking statements. Although the Company considers that these statements are based on reasonable hypotheses at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual results to differ materially from those indicated or projected in these statements."

Individual shareholders and market authorities
Mr Jean-Régis CAROF
Tel. : +33.1.47.56.83.02
jcarof@dgaf.loreal.com

Financial analysts and institutional investors
Mrs Caroline MILLOT
Tel. : +33.1.47.56.86.82
cmillot@dgaf.loreal.com

Journalists
Mr Mike RUMSBY
Tel. : +33.1.47.56.41.95
mrumsby@dgc.loreal.com

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For more information, please contact your bank, broker or financial institution (I.S.I.N. code: FR0000120321), and consult your usual newspapers, and the Internet site for shareholders and investors, http://www.loreal-finance.com, or its mobile version on your cell phone, http://mobile.loreal-finance.com.