2. Company Profiles
• Head & Shoulders
• Right Guard
• On October 31, 1837, Procter & Gamble was born. (William
Procter and James Gamble).
• A multinational corporation headquartered in downtown
Cincinnati, Ohio and manufactures a wide range of consumer
• P&G is a global manufacturer of consumer goods, including
household care, beauty care, health, baby and family care
• In 2011, P&G recorded $82.6 billion dollars in sales.
• In 2011, Fortune magazine ranked P&G at fifth place of the
"World's Most Admired Companies" list.
• Procter and Gamble is a tier one sponsor of the London's
Olympic Games 2012 and sponsors 150 Athletes.
• The original Gillette Company was founded by King Camp
Gillette in 1901 as a safety razor manufacturer.
• The Gillette brand is synonymous with shaving and
personal care products.
• King Gillette sought protection of his fledgling business
for safety razors when he applied for the trademarks for
razors and razor blades, soap, and shaving brushes on
Wednesday, May 27, 1908.
5. The Deal
• Procter & Gamble employs a workforce of 110,000 worldwide
and has a market capitalization of $141 billion. Gillette
employs 29,400 employees worldwide and has a market
capitalization of $45 billion.
• Merrill Lynch & Co. acted as financial advisor and Cadwalader,
Wickersham & Taft, LLP acted as legal counsel to P&G.
• UBS and Goldman Sachs acted as financial advisor and Davis,
Polk & Wardwell acted as legal counsel to Gillette.
• The transaction was valued at approximately $57 billion (USD)
based on closing NYSE stock prices of Jan. 27, 2005.
P&G, USA) acquires The Gillette Company (Gillette, USA) by
way of purchase of shares.”
6. • The acquisition was approved by the European Union and the
Federal Trade Commission, with conditions to a spinoff of
certain overlapping brands. P&G agreed to sell its SpinBrush
battery-operated electric toothbrush business to Church &
Dwight. It also divested Gillette's oral-care toothpaste line,
Rembrandt. The deodorant brands Right Guard, Soft & Dri,
and Dry Idea were sold to Dial Corporation. The companies
officially merged on October 1, 2005. Liquid Paper, and
Gillette's stationery division, Paper Mate were sold to Newell
Rubbermaid. In 2008, P&G branched into the record business
with its sponsorship of Tag Records, as an endorsement for
TAG Body Spray.
7. The Concentration
• The proposed concentration was effected through a merger
between a wholly-owned subsidiary of the Procter & Gamble
Company, Aquarium Acquisition Cooperation, formed for the
purpose of the contemplated merger, with the Gillette
Company. As a result, Gillette will continue as the surviving
operating unit and will become a wholly owned subsidiary of
P&G. The operation consist in the acquisition of sole control
• EXCHANGE RATIO- Each Gillette common share was converted
into the right to receive 0.975 shares of P&G common stock.
Valuing the stock at $53.94 -- a premium of about 18
8. • The offer valued Gillette's shares at about $54 a share.
• Gillette shares held in the Buy DIRECT Plan, including
dividend reinvestment shares, are being automatically
converted into the P&G Shareholder Investment Program
(“SIP”) at the 0.975 rate.
• Gillette shares held in the Direct Registration System (“DRS”)
are being automatically converted into whole shares of P&G
common stock in DRS form.
• Shareholders of both companies overwhelmingly
approved P&G's acquisition of Gillette that would form
the world's largest consumer products company, with
such brands as P&G's Pampers and Gillette's line of
razors. In announcements at separate special meetings,
the companies said 96 percent of the shares that were
voted favored the merger.
9. • News of the deal sent Gillette’s shares soaring $5.49, or 12
percent, to $51.17 in very heavy trading on the New York
Stock Exchange, while P&G’s fell $1.50, or 2.7 percent, to
$53.82 also on the NYSE.
• On Wall Street, shares in Gillette closed up nearly 13% , while
P&G slid 2.1%.
• Involved 6,000 job cuts, 4% of the combined workforce of
140,000. Company expected to reap $14 Billion in cost
• Mr. Buffett owns about 33% of Berkshire Hathaway which in
part owns 10% of Gillette. And at the end of the merger, he
would be receiving 93million shares of the new company.
• Regulatory Concerns: P&G’s focus on more valuable brands
has led to it shedding a number of ailing lines. It has sold off
Sunny Delight, Sure deodorant and several detergents, and
there is speculation that Lafley will soon dispose of
underperforming brands from the Gillette business.
10. The Unique Combination
• Remarkable similarities in organizational structure.
• Highly complimentary brand, markets and
• Both companies going into great momentum going
into the merger.
• P&G and Gillette would have 21 brands with more
than $1 billion in annual sales each.
12. Why P&G Acquire Gillette?
• The Gillette Company was the market leader in several
product categories including blades & razors, oral care and
• Gillette has recorded a strong earnings since 2001 and in the
most recent quarter before the acquisition Gillette recorded
income of $475 million, making it a rich company.
• More consumers are traded up to its pricier M3 power Razor
and series of hurricanes in the boosted battery sales.
• Gillette was strong in emerging markets like India and Brazil
where P&G has been always outperformed by Unilever.
• P&G is already the world's largest consumer products
company, but the addition of Gillette gives it new clout with
retailers, including the world's largest, Wal-Mart.
13. Is This Deal a Success?
• Most of Gillette's senior managers have left the
• P&G's stock has lagged behind key competitors',
including Colgate-Palmolive Co. and Unilever.
• The recession buffeted Gillette's core business -- pricey
razors and blades.
• P&G's stock is up 12% since the day before the deal
was announced in 2005 but down 8% over the same
period. But it's worse than two of the three
competitors most directly affected by the deal,
including Colgate-Palmolive Co. (up 53%) and Unilever
14. • However, the deal was aright step, at the right
time and with the right partner.