Procter And Gamble Case Study

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Introduction The current assignment, is trying to examine the acquisition of Gillete by Procter and Gamble. Both companies were competing in the FMCG sector, but they were not direct competitors. The deal was made in January of 2005 and it was finalized in July of 2006. Procter & Gamble bought Gillete in 57 billion $ deal, making in that way the biggest acquisition of its history. Expanding in that way its brand portfolio, by adding other famous firms, resulting into a total amount of 22 billion dollar brands. The current paper will demonstrate: • The situation of the companies before the deal • The industry characteristics • The terms of the deal and its implementation • Stock fluctuations due to deal • Possible synergies of the deal • The…show more content…
In particular, Gillette’s senior management and board of directors have focused on Gillette’s long-term ability to compete in the consumer products market and Gillette’s reliance on its blades and razors business. In April of 2002, after discussion with, and approval of, the Gillette board of directors, James M. Kilts, Chairman, President and Chief Executive Officer of Gillette, approached the chief executive officer of a major consumer products company with respect to a potential business combination with that company. In the course of these discussions, the parties determined that they had substantially differing views as to their respective valuations and that significant differences existed regarding certain issues relating to the management and culture of the combined company. The parties therefore terminated discussions with respect to a possible…show more content…
The transaction, was expected to finish in fall 2015 and after completion Gillette will be a fully owned subsidiary of P&G. Additionally, P&G and its subsidiaries planned to buy back $18 to $22 billion of P&G's stock till summer 2006. The shareholders of Gillette will be finally compensated with approximately 60% stock and 40% cash. The transaction is valued at approximately $57 billion (USD) based on closing NYSE stock prices of Jan. 27, 2005. The outcomes P&G with this merger expects to achieve revenue and cost synergies at a present value of about $14 to $16 billion (USD), this amount will come from the scale of the combined company and as a result of P&G's unique organization structure. Moreover the company will cut off duplicate costs. For that purpose P&G said it anticipates a reduction of almost 6,000 employees, or about 4% of the combined work force of 140,000 employees of the two companies. These reductions would mainly come from eliminating overlapping managerial

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