Welcome to the Business Journal Archives
Search for articles below, or continue to the all new BusinessJournalDaily.com now.
Search
Procter & Gamble to Acquire Gillette Co. in $57B Transaction
"CINCINNATI -- The Procter & Gamble Co. has signed an agreement to acquire 100% of The Gillette Co., officials announced earlier today. Gillette, founded in 1901 and headquartered in Boston, markets a number of consumer products such as Gillette razors and blades, Duracell CopperTop batteries, Oral-B manual and power toothbrushes, and Braun shavers and small appliances.The transaction is valued at approximately $57 billion (USD) making it the largest acquisition in P&G history.Under terms of the agreement, unanimously approved by the boards of directors of both companies Thursday, P&G has agreed to issue 0.975 share of its common stock for each share of Gillette common stock. Based on the closing share price of P&G and Gillette stock on Thursday, this represents an 18% premium to Gillette shareholders. The transaction is expected to close in the fall.In addition, P&G and its subsidiaries plan to buy back $18 billion to $22 billion of P&G's common stock during the next 12 to 18 months. Over time, this will essentially result in a total financial impact on the company as if the deal were structured with approximately 60% stock and 40% cash, officials said.P&G expects to achieve revenue and cost synergies at a present value of about $14 billion to $16 billion, mainly through the scale of the combined company applied to leveraging P&G's organization structure, removing duplicate costs and driving further efficiencies. P&G said it anticipates enrollment reductions of some 6,000 employees, or about 4% of the combined work force of 140,000. Most of these reductions should come from eliminating management overlaps and consolidation of business support functions."This merger is going to create the greatest consumer products company in the world," said Warren E. Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., Gillette's largest shareholder. "It's a dream deal. To quantify that, I intend to purchase enough shares so that by the time the deal is closed, we will have 100 million shares of P&G." Berkshire Hathaway holds 96 million shares of Gillette stock which represents the equivalent of 93.6 million shares of P&G, Buffett said.The Gillette Co. has been in business for more than 100 years. The company employs nearly 30,000 and operates 31 manufacturing plants in 14 countries. P&G employs about 110,000 in 80 countries.Visit the Procter & Gamble Co.: www.pg.com"