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P&G’s Acquisition of Gillette
Boy meets Girl
• 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
• 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
• 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
Strategy of Integrative
Negotiation
• 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.
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
9
Arbitrator
3D Negotiation
Mediator
Warren Buffet
Bankers
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.
11

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P&G Gillet Negotiation - Boy meets girl

  • 1. P&G’s Acquisition of Gillette Boy meets Girl
  • 2.
  • 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
  • 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.
  • 8.
  • 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 9 Arbitrator 3D Negotiation Mediator
  • 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. 11