Procter & Gamble Takes Over Gillette

28/05/01 - Procter & Gamble Company announced today that it has purchased The Gillette Company for approximately $57 billion US. The move will create the world`s largest consumer goods company and is the largest acquisition in P&G history. Gillette markets a number of category leading consumer products such as Gillette razors and blades, Duracell batteries, Oral-B, Braun shavers and small appliances.

A.G. Lafley, Chairman, President and Chief Executive Officer of Procter & Gamble says both companies are operating from a position of strength and “"This combination of two best-in-class consumer products companies, at a time when they are both operating from a position of strength, is a unique opportunity,"

Under terms of the agreement, unanimously approved by the board of directors of both companies on January 27, P&G has agreed to issue 0.975 shares of its common stock for each share of Gillette common stock. Based on the closing share price of P&G and Gillette stock on January 27, 2005, this represents an 18% premium to Gillette shareholders.

P&G will acquire all of Gillette`s business, including manufacturing, technical and other facilities. The transaction, which is subject to certain conditions including approval by Gillette`s and P&G`s shareholders and regulatory clearance, is expected to close in fall 2005.

In addition, P&G and its subsidiaries plan to buy back $18 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.

The new company formed from the combined Procter & Gamble and Gillette will create a portfolio of $21 billion dollar brands and have the top global market position in categories representing about two-thirds of total sales.

Long-term sales growth is expected to rise and both companies have expertise in health and personal care. P&G’s strength comes from its women’s personal care brands which include Olay, Always, Tampax, Cover Girl and Max Factor whereas Gillette has had a deep knowledge in the men’s grooming category. Gillette and P&G also share complementary technology platforms in skin care, especially between the Oral-B and Crest brands.

The new combined company is expected to increase annual sales growth targets, increase opportunities for more innovation and provide cost saving synergies.