Procter & Gamble has signed a deal to acquire 100% of The Gillette Company in a $57 billion transaction.
“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,” said A.G. Lafley, chairman, president and CEO of Procter & Gamble. “Gillette and P&G have similar cultures and complementary core strengths in branding, innovation, scale and go-to-market capabilities, making it a terrific fit. We are pleased James M. Kilts, Gillette’s chairman of the board, chief executive officer, and president will join P&G’s Board of Directors and serve as P&G vice chairman – Gillette,” Lafley continued.
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.
“This deal creates value for P&G shareholders and provides upside for P&G’s sustainable growth prospects,” said Clayton C. Daley, P&G’s CFO. “Gillette and P&G are well-positioned to manage the integration, deliver revenue and cost synergies and retain strong leadership.”
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.
“This marks the realization of an historic next phase of great opportunity for Gillette and also for P&G,” said Kilts. “It brings together two companies that are complementary in their strengths, cultures and vision to create the potential for superior sustainable growth.”
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.
“This merger is going to create the greatest consumer products company in the world,” said Warren E. Buffett, chairman and CEO of Berkshire Hathaway, Gillette’s largest shareholder. “It’s a dream deal. To quantify that, I intend to purchase enough shares so that by the time the deal is closed, we will have 100 million shares of P&G.” Berkshire Hathaway currently holds 96 million shares of Gillette stock which represents the equivalent of 93.6 million shares of P&G.
Murdok | Breaking eBusiness News
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