P&G Buy Gillette for $57 Billion

PROCTER & Gamble, the consumer products giant, announced today that they have Gillette in a deal of £30.2 billion. P&G said bringing products such as Pampers nappies and Wella hairspray together with Gillette razors and Duracell batteries under the same roof is “a unique opportunity”. The combined company would boast more than $60 billion in annual revenue, giving it increased leverage at stores ranging from discounters to grocers. This deal create The deal values Gillette, best known for its razors, at $53.94 per share, an 18 percent premium to its Thursday closing stock price.

The P&G-Gillette deal has the key support of billionaire investor Warren Buffett, whose Berkshire Hathaway Inc. has a 9 percent stake in Gillette. Gillette’s biggest shareholder legendary US investment guru Warren Buffet described the takeover - which is subject to approval by regulators and shareholders - as “a dream deal”. He added: “This deal is going to create the greatest consumer products company in the world.” According to analysts, each brand in the enlarged group will command annual sales of more than £1bn. Cincinnati-based P&G’s chairman, AG Lafley, said: “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.”. “In the consumer sector you see some consolidation with Gillette and Procter & Gamble,'’ said Daniel Kerbach, who helps manage 60 billion euros ($78 billion) at Activest Investment in Munich. “This helps the market. If you see a broad consolidation, it’s good for the market.'’

Analysts estimated that the deal would reduce P&G’s earnings by 15 cents to 28 cents a share in fiscal 2006, which begins in July, but said that was outweighed by the strategic benefits. The deal “creates an enterprise unmatched in geographic reach and competitive positioning … and targeted synergies of $14 billion-$16 billion are massive,” said William Schmitz, analyst at Deutsche Bank Equity Research. The deal would be the largest transaction since J.P. Morgan Chase & Co. purchased Bank One Corp. for $56.8 billion a year ago, according to research firm Dealogic.