Mergers, Acquisitions and Takeovers Case Study

Gillette's Merger with P&G : The Strategic Fit?

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Abstract:
Procter & Gamble (P&G), the number one US consumer goods company, and Gillette, the world's largest manufacturer of shaving products, announced the merger of their operations in January 2005. The $57 billion merger was the ninth largest in the US corporate history. Post-merger, the new company would dethrone Unilever as the world's largest producer of consumer goods and is expected to have bargaining power rivaling that of global retailers like Wal-Mart and Carrefour. The merger, scheduled to be completed in late 2005, is expected to reap cost synergies of up to $22 billion for the new company. But the problems encountered by Daimler-Chrysler and Hewlett Packard-Compaq's mergers showed that size could be a potential hindrance to the success of a merger.

Pedagogical Objectives:

• To discuss the potential synergies that P&G can gain from the merger
• To analyse the problems it is likely to face in the course of the merger's successful execution.

Keywords : Procter & Gamble Company (P&G);Mergers,Acquisitions,Alliances Case Study; Gillette Company (Gillette); Consumer product companies; Consumer goods industry; Merger of equals; World’s largest FMCG (Fast Moving Consumer Goods) company; Cost synergies; Billion dollar brands; Wal-Mart effect; Strategic fit; Industry consolidation; Risk of execution failure; Cross-cultural competence; Colgate Palmolive; Unilever

Contents : 
P&G, Gillette, and the Merger
P&G and Gillette: Is the Merger a Strategic Fit?
Fortune 500 Industry Data: Household and Personal Products Industry
The Biggest Mergers in US Corporate History
The 16 Billion Dollar Brands of P&G
Products and Production Units of Gillette
Steps in Making the Merger Work