Case Study Of P & G Acquisition Of The Gillette Company

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On October 1, 2005, P&G acquisition of The Gillette Company. Under the purchase agreement, the total purchase was approximately $53.4 billion including common stock, the fair value of vested stock options and acquisition costs. The Gillette oral care, batteries and personal care businesses were subsumed within the Health Care, Fabric Care and Home Care, and Beauty reportable segments, respectively. The deal is a bold move by P&G Chief Executive A.G. Lafley, who has led the company out of dark times in the past. Moving too fast on a restructuring plan implemented by former CEO Jager, the company posted several disappointing quarters and its stock lost more than half its value in 2000. The merger, would create a larger company with revenues of more than $60 billion that would have even greater clout against mass-market retailers like Wal-Mart, which have been pressuring consumer product suppliers to keep costs low. Lafley was optimistic that the company would not be forced to divest many properties as part of an antitrust review. Strengths Lafley, and later Taylor, began recalibrating the company’s strategy in China. P&G had entered early, in 1988. But it underestimated the growth of Chinas upper class, focusing instead on the lower- to middle-class market. Its diapers, for example, proved vulnerable to higher-end offerings from Japanese competitors; P&Gs market share has fallen nearly five percentage points since 2010, to 37%, according to Euromonitor & Citi Research. Explained Taylor at a recent conference: we looked at it too much like a developing market as opposed to the most discerning customers in the world is now trying to move upmarket in China. P&G has also shifted more resources back to North America, where it has a more dominant share. And it has become leaner and less bureaucratic, in part through huge job cuts” 35,000 by the end of 2016. P&G has slashed product categories from 15 to 10 to improve focus. Says Jon Moeller, its longtime CFO: the businesses we are keeping are those where we have a product technology that makes a consumer difference “and, almost to a one, daily use items. Weaknesses CEO succession is a complex, often messy endeavor. Just ask the board at Disney, which has struggled

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