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P&G to acquire Gillette for US$57 billion

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Friday, January 28, 2005

New York — American manufacturing giant Proctor & Gamble (P&G) plans to acquire Gillette Co. for US$57 billion in stock. The purchase plan calls for P&G to swap 0.975 shares of its stock per share of Gillete Co. P&G also announced a stock buyback program in which they would purchase up to US$22 billion of shares over the next 18 months. Including the stock buyback program, the merger is being financed by 60 percent stock and 40 percent cash.

P&G is known for brands such as Ariel and Tide washing powder, Max Factor cosmetics, Pringles potato crisps (chips) and Hugo Boss and Lacoste perfumes.

Gillette, known for brands such as Gillette razors, Oral B dental care, and Duracell batteries, has had growing problems with the growth of private labels and price cuts demanded by large supermarkets.

After the acquisition is completed, Gillette's CEO James Kilts will be P&G's vice-chairman. Kilts said that he expects that this acquisition will cause additional mergers to take place.

"I believe the consumer product industry needs to consolidate," said Kilts, "we believe we can bring these companies together and create a juggernaut."

P&G and Gillette have a combined market capitalization of about $185 billion US, which will make it the largest in the sector.

Layoffs

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The early morning announcement states that 6,000 employees will be eliminated. Most of the layoffs will result from reducing overlapping management positions and other supporting positions within the combined company.

Antitrust regulators in the US and Europe plan to review the acquisition, to determine whether the combined company will have too much power over pricing and shelf space.

P&G plans to provide additional details about the merger Friday morning (East Coast time) in New York.


References

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This page is archived, and is no longer publicly editable.
Articles presented on Wikinews reflect the specific time at which they were written and published, and do not attempt to encompass events or knowledge which occur or become known after their publication.

Got a correction? Add the template {{editprotected}} to the talk page along with your corrections, and it will be brought to the attention of the administrators.

Please note that due to our archival policy, we will not alter or update the content of articles that are archived, but will only accept requests to make grammatical and formatting corrections.

Note that some listed sources or external links may no longer be available online due to age.
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