Real Money: P&G to Buy Gillette for $57 Billion

Discussion
Jan 28, 2005
George Anderson

By George Anderson


If this is a dream, then Warren Buffett probably doesn’t want anyone to wake him up.


Yesterday, the boards of Procter & Gamble and Gillette unanimously agreed to a deal that, if approved by regulators, would result in P&G acquiring Gillette to form the largest consumer products company in the world. The price tag on the deal: a mere $57 billion. Under the terms of the agreement, P&G will issue 0.975 shares of its common stock for each share of Gillette common stock.


Mr. Buffett, whose Berkshire Hathaway owns 9.7 percent of Gillette stock, described the deal as a “dream” and said he planned on purchasing an additional 6.4 million P&G shares to give himself 100 million shares of the new company when the deal is closed later this year.


In a statement released today, P&G’s chief executive A.G. Lafley said, “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. 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.”


James Kilts, Gillette’s chairman, chief executive officer and president will become a member of P&G’s board as part of the deal. His title will be P&G vice chairman – Gillette.


Moderator’s Comment: What will the P&G/Gillette deal mean for the combined company’s manufacturer competitors and retail trade partners?

George Anderson – Moderator

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