Best Deal Gillette Analysis

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Five years later—the acquisition by P&G hasn’t paid off —yet •Gillette’s businesses have been a drag for P&G
Sales growth projections have been under met
Most of Gillette's senior managers have left.
P&G's stock has lagged behind key competitors', including Colgate-Palmolive Co. and Unilever •Efforts to expand Gillette and Venus brands have not been too successful-fewer people shave since they’re unemployed or don’t go out as much •There have been more international success (Europe, Brazil, Asia KEY STAKEHOLDERS:

Top management-asked to take lower-profile positions or even forced out Employees-fear of workforce reductions (loss of 4% of workforce) Politicians-concerned with longterm social and economic impact that reduced employment can have on a community(Massachusetts) Shareholders-fear that the offer price may not be adequate compensation Regulators-make sure there isn’t violation of state and federal laws, including antitrust laws

1)Executive Summary (including your recommendation)
This proposed acquisition of Gillette by Proctor & Gamble would make P&G the world’s largest consumer Products Company. P&G was known for its consumer products (approximately 150 brands) including some of the worlds most recognizable and Gillette was known for its razor business and also controlled two other brands. With P&G predominately marketed for women and Gillette marketed mainly for men, most people dubbed this “the perfect marriage”-a way to effectively reach both their male and female consumer segments worldwide. It was a chance to combine complementary business lines and an ability to create an industry leader that could better negotiate with larger retailers (like Wal-Mart and Target)as far as control pricing and product placement in superstores nationwide. 2)A Statement of the Problem(s) you see the firm or decision maker facing

Kilt’s compensation package totaling $164M; “Change of Control” clause Conflict of interest that exists with an investment banking firm putting the deal together, also providing “fairness of opinion” Anti-competition problems for some of their business lines (ie. Its teeth-whitening products, adult powered battery toothbrushes and men’s antiperspirants/deodorant markets Scrutiny from state governments (ie. Massachusetts)

3) Methodology or Techniques (those that you believe are best for this problem and that you recommend employing) 4) Data Requirement or Sources (those necessary to employ your recommended technique) 5) Key Assumptions (those you had to make to conduct your analysis) 6) Analysis

7) Conclusions and Concerns


Possible Review Questions the Proctor & Gamble Acquisition of Gillette Case 1.How would you describe the business case for this proposed acquisition of Gillette by Proctor & Gamble?

This proposed acquisition of Gillette by Proctor & Gamble would make P&G the world’s largest consumer products company. P&G was known for its consumer products (approximately 150 brands) including some of the world’s most recognizable and Gillette was known for its razor business and also controlled two other brands. With P&G predominately marketed for women and Gillette marketed mainly for men, most people dubbed this “the perfect marriage”-a way to effectively reach both their male and female consumer segments worldwide.

It was a chance to combine complementary business lines and an ability to create an industry leader that could better negotiate with larger retailers (like Wal-Mart and Target)as far as control pricing and product placement in superstores nationwide.

Both companies were key performers in the consumer products industry, but both had specific corporate strengths within the industry. P&G had strength in marketing to women, where as Gillette’s core segment was men

2.This acquisition was often referred to a $57 billion dollar deal? How did they come up with $57 billion? (The top section of Exhibit 9 of the case does provide some...
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