P&G Gillet Negotiation - Boy meets girl

1. P&G’s Acquisition of Gillette
Boy meets Girl

3. • To become world’s largest consumer products company.
• Benchmarking to HUL
• Design the worlds best class sales and distribution model .
• To enhance P&G’s Strong and diversified brand portfolio.
• To cut down the costs to ensure productivity gains.
• To make faster sales growth
• To gather considerable bargaining power.
• While P&G’s strength lay in women’s personal care products with brands such as Olay, Always,
Tampax and Max Factor,
• Gillette’s strength lay in the men’s grooming category.
• By acquiring Gillette, P&G would be adding the world’s best shaving products to its portfolio.
Rationle behind Acquisition

4. • P&G's offer of $57 billion for the other American consumer-goods firm
• an 18% premium on its stockmarket value
• Warren Buffett, that most renowned of American investors, who could be
considered the father of the bride through his 9% stake in Gillette, cooed
delightedly that the proposed merger
• P&G may believe that it can squeeze more value out of Gillette's bran
• $50 valuation per share
P & G’s Strategy

5. • Warren Buffett, that most renowned of American investors, who could be
considered the father of the bride through his 9% stake in Gillette, cooed
delightedly that the proposed merger.
• Rejected the offer of $50 valuation
• Agreed on .975 P&G shares per Gileete Share from 0.915 with the help of
mediators
Gillette

6. Strategy of Integrative
Negotiation

7. • Emphasis on Win-Win Situation
• Integrative Goal
• Focus on Commonalities
• Objective Criteria For Standard of performance
• P & G and gilette together have $180 billion over the globe.

9. The Bankers: $ 30 m each for
confirmation of the deal where they
got the money if the deal goes. Warren
Buffet
Past owner 10%
of Gillette
Current owner
of 3.5% of P&G.
It’s a
Dream
Deal
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Arbitrator
3D Negotiation
Mediator

10. Warren Buffet
Bankers

11. Lesson Learned
1. Hybrid deal can bring big benefit for target’s shareholder
with minimum tax.
2. Investment Bank is necessary for M&A deals.
3. Buffet’s blessing has strong influence.
4. CEO’s compensation should always be measured by the
value he/she creates.
5. M&A can bring more power to negotiate with large
retailers (Wal-Mart).
6. Synergy opportunities in M&A: cost efficiency, increase
market power, complimentary R&D, etc.
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