The Merger Between Gillette and Procter and Gamble Essay -- GCSE Busin

"This merger is going to create the greatest consumer-products company in the world †¦ It's a dream deal." Warren Buffett "This was two companies with great products, strong management and terrific business models coming together to create arguably the best consumer product company in the world" Michael Barbaro, Washington Post[1] Introduction: The merger between Gillette and Procter and Gamble is indeed a strategic move on the part of both parties. It is a corporate marriage creating a union between male and female product lines; a contract valued at more than $55 billion dollars. [2] Commanding virtually the entire market, Gillette has been the world leader in the production of razors and other shaving products. In 2004, their global share of the razor market was 71.5%, nearly five times that of their nearest competitor. However, Gillette’s depth runs much deeper than simply shaving accessories; oral care products, cosmetics, and domestic appliances are a significant party of their sales arsenal. With the acquisition of Duracell Batteries in 1995, Gillette then became a major sales force in the battery market. In fiscal year 2004, their net sales were $10.47 million, a 13% increase from the 2003 figure. Meanwhile, Procter and Gamble is the biggest manufacturer of domestic products, with over 270 brands that are categorized in 6 different marketing sectors: laundry and cleaning (detergents), paper goods (toilet paper), beauty care (cosmetics, shampoos), food and beverages (coffee and snacks), feminine care (personal hygiene products) and healthcare (toothpaste, medicine). Like Gillette, P&G also exceeded their 2004 financial expectations exceeding their sales target by 19.6%.[3] Both companies share a culture of innovation and a history of cooperation and is a marriage that will most likely lead to prosperous financial returns in the years to come. Background: The history of the Gillette Company is incredibly interesting, dating back to 1894 when it founder, King Camp Gillette, invented the safety razor. Gillette developed the idea of a disposable razor while working as a salesman. In his travels and interaction with males of all walks of life, Gillette stumbled upon the idea of the ‘disposable safety razor’ that men shaving on their own would find much more convenient and user friendly. Before the adve... ...tivity Drove Deal,† The Washington Post, January 29, 2005. [2] Editor, â€Å"The Latest Mergers: Why some will fly and others won’t,† Knowledge Wharton, March 30, 2005 [online]: http://www.findarticles.com/p/articles/mi_m0EIN/is_2005_March_1/ai_n11835282 [3] P&G 2004 proxy report: http://www.pg.com/annualreports/2004/pdf/PG2004AnnualReport_Online.pdf [4] â€Å"William Nickerson: Inventor of the Week,† http://web.mit.edu/invent/iow/gillette.html [5] ICFAI Knowledge center [6] Ibid. [7] www.pg.com/company/who_we_are/ourhistory.jhtm [8] Ibid. [9] www.mind-advertising.com/us/pg_us.htm [10] â€Å"The Rise of the Superbrands,† The Economist, Feb5th, 205, p.63. [11] http://www.agribusinessaccountability.org/pdfs/140_Procter%20Gamble.pdf [12] http://www.fumento.com/bomis21.html â€Å"Procter & Gamble's Non- Neither Satan Nor (Sigh) Savior’.† [13] Environmental Research Foundation, http://www.ejnet.org/rachel/rhwn349.htm [14] http://www.pandgkills.com/shareholder.html [15] http://knowledge.wharton.upenn.edu/ [16] Batchelor, Charles, â€Å"Dealmakers eye repatriated funds,† The Financial Times, Tuesday, March 29th, 19. [17] Ibid.