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P&G, Gillette Merger Facts

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Reuters offers 5 Five Facts on P & G and Gillette merger. Those are listed below plus other interesting facts about this huge merger.

The combined company will have more than $60 billion in annual revenues. Here are some key facts about the two firms.

  1. Cincinnati-based Procter & Gamble was established in 1837 and made its name selling soap and candles to U.S. government soldiers during the civil war.
  2. Boston-based Gillette spends around $600 million annually on advertising.
  3. In May the razor-maker paid a reported 40 million pounds ($75.4 million) to sign international soccer star David Beckham to a three-year deal as its global face.
  4. 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.
  5. Gillette’s profit beat market expectations last October after Hurricane Ivan spurred the buying of Duracell batteries. ($1=.5303 Pound)

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    Another blog post adds this:

    “The Gillette and Proctor Gamble merger, now this merger makes a lot more sense to me. Gillette is the number 1 in razor accessories and proctor gamble is number 1 in consumer products, a marriage of the best in their respective industries. I’ve always liked a good horizontal expansion, now the newly formed company will have products being used in most of the houses in the US (and that’s probably an understatement). Those who shave probably use Gillette, those who shower use pantene pro-v or head and shoulders or the other products from P & G. I can’t wait to see how this will develop in the future, now it’s very important for these two companies to take the process slowly, there’s no hurry in the integration process. One can only imagine how ecstatic Warren Buffett is, he will get a share of the most popular razors,toothpaste, shampoo, soap and detergent brand in the US.

    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, he likes whole numbers so he’ll buy stocks until he gets 100million shares of the new company that would have about 2.5 billion shares. Which would be about 4% of a company that will have revenues of 60 billion dollars a year.”

    The Conglomerate blog adds their take on the merger …

    “In case you have been in a no-media zone this morning, Procter & Gamble has announced that it will acquire Gillette Company. The WSJ article is here.

    According to the terms of the deal, Gillette shareholders will receive .975 shares of P&G for each share of Gillette that they hold. According to the press release, P&G plans to repurchase approximately 40% of that newly issued stock (valued at between $18 and $22 billion) within the next 12-18 months.

    Of course, Warren Buffet’s Berkshire Hathaway stands to benefit the most from this merger, owning 96 million shares of Gillette and announcing that it will buy more in anticipation of the merger.

    The merger of the two companies will create “the world’s largest consumer products conglomerate.” Both companies are strong, diversified companies, so one wonders what uncaptured synergies there could be here.

    The WSJ article points out that P&G is adept at taking innovations from one product and transferring it to another product, so there may be opportunities to improve existing Gillette products. In addition, the companies are stating that the merger will give them more negotiating power with the most powerful buyer of consumer products — Wal Mart. I am sure that’s true, but I can’t help but notice that other closely related companies are stating that they have to merge to compete with Wal Mart (Sears & KMart).

    This merger will face some regulatory scrutiny because many of their products overlap (Crest/Oral-B; Secret/SoftnDri; Old Spice/Right Guard. When technology companies merge and have to explain reasons why to the DOJ/FTC, they usually throw in the rationale that they have to merge to compete with Microsoft.”

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    P&G, Gillette Merger Facts
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