P&G to Acquire Gillette for $57 Billion
NEW YORK (AP)—Procter & Gamble Co., the leading U.S. maker of household products whose brands include Crest, Pampers, Tide and Charmin, is buying the razor and battery maker Gillette Co. for $57 billion in a deal that will create the world's biggest consumer-products enterprise, the companies announced Friday.
The merger, which must still be approved by regulators and shareholders, would create a company with revenues of more than $60 billion that would have even greater clout against mass-market retailers like Wal-Mart Stores Inc., which have been pressuring consumer product suppliers to keep costs low.
Executives from both companies made their case for the merger in a presentation Friday to Wall Street analysts, saying the combination would bring together the marketing and distribution strengths of P&G, whose products are marketed largely to women, together with Gillette's high-profit brands like razors, which are marketed to mainly men.
As part of the cost-cutting that would follow the deal, executives said the merger would result in the elimination of about 6,000 jobs, or 4 percent of the combined work force of about 140,000.
"We believe we can bring these companies together and create a juggernaut," Gillette Chief Executive James M. Kilts said at the presentation. Kilts will become vice chairman of P&G and join its board.
Kilts, who has agreed to stay on for at least a year to lead the integration of the two companies, said the combination would provide Gillette with opportunities to sell their products in developing markets including China and East Europe.
"I'm a great believer in scale," Kilts said. He said he would rather lead a consolidation in consumer products makers than "get stuck with the leftovers."
The deal would add Gillette's Duracell battery, Right Guard deodorant and line of razors to P&G's collection of more than 300 consumer brands, which include Head and Shoulders shampoo, Pringles, Crest toothpaste and Bounty paper towels. P&G is much larger than Gillette, and has more than three times as many employees.