Mergers and Acquisitions: Proctor and Gamble, and Wella Ag

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In regards to acquisitions, it is important to distinguish between mergers and acquisitions. In a merger, two companies come together and create a new entity. In an acquisition, one company buys another one and manages it consistent with the acquirer’s needs. An acquisition that involves integration has greater staffing implications than one that involves separation (Rizvi, 2008). A combining of companies is a major change. Mergers and acquisitions represent the end of the gamut of options companies have in combining with each other. It is the mergers and acquisitions that are the combinations that have the greatest implications for size of investment, control, integration requirements, pains of separation, and people management issues (Doz and Hamel, 1998).

This paper will provide a brief history of the two companies, as well as a financial analysis and a summary to conclude whether this merger was a success or a failure. Proctor & Gamble is a fortune 500 company. William Procter, a candlemaker, founded the company and James Gamble a soap maker, formed the company known as Procter & Gamble (P & G) in 1837. The two men emigrated from England and Ireland and settled early in Cincinnati. They might never have met had they not married sisters: Olivia and Elisabeth Norris. (Britannica Encyclopedia, 2007) The business decision was made by their father-in-law to make the two men business partners. The company prospered during the 19th century. In 1859 sales reached one million dollars. By this point, approximately eighty employees worked for Proctor & Gamble. During the Civil War the company won contracts to supply the Army with soap and candles. ( The products of the company were in such demand that it increased the profit of Proctor & Gamble. In the 1880s, Proctor & Gamble began to market a new product, an inexpensive soap that floats in water. The company called the soap Ivory. Ivory is the only soap that floats in water. The Ivory soap was made by mistake of one of the P&G employee’s! The company had gotten great response from customers around the country they inundated the company, and P&G began to mix the ruin product as a standard mix. During the 1880 a German Empire an ambitious 26-year-old hairdresser Franz Stroher started his own business. He made wigs and hairpieces that adorn the heads of the fashion-conscious of the time. Franz’s breakthrough product was a revolutionary invention called the Tullemoid waterproof. This product became a high demand, which this is the first product to both be waterproof and to secure the wig. It went on to be a bestseller in 1904 when Stroher set up his first factory in the East German town Rothenkirchen (Saxony). The company was founded on innovation and their vision and values remain inherent today. Wella is one of the worlds leading cosmetic suppliers. Founded in 1880 the Darmstadt based Wella AG can now look back on more than 125 years of beauty expertise tracing its success to its professional, consumer (retail) and cosmetics and fragrance divisions. Since 2003 Wella AG has been a part of the Proctor & Gamble Group, which is the global number one consumer goods company. Wella is known for style and fashion between many American and European customers. Wella has and continues to discover more new ingredients, including fruit wax, and has won an important award for technical innovation. Mean while the company developed the use of keratin to repair damaged hair. The company continues to focus on products that nourish and protect. The system Professional Liquid Hair hit the market and was another world first. This paper will research the merger of both of those companies, and also provide an in depth financial analysis of both corporations. What are the pros and cons of merging or acquiring another company? A graph will better explain this business theory. Proctor & Gamble’s partnership with Wella AG has many benefits but the most compelling is the ease at which both...
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