Description

PROBLEMS OF MERGER




Prepared for
Amity International Business School, Noida
Prepared by:
Romit ostwal







SYNOPSIS:

• Introduction of theoretical framework
• Statement of the problem
• Purpose of study
• Review of literature
• Question and hypothesis
• Limitations
• Significance of study
• Bibliography
• Appendices


INTRODUCTION OF THEORETICAL FRAMEWORK

Procter & Gamble announced the largest acquisition in its history, agreeing to buy Gillette in a $57 billion deal that combines some of the world's top brands and could lead to further mergers involving products consumers know and love.
Procter & Gamble (Research) is already the nation's largest consumer products company, making everything from Pampers to Tide, from Crest toothpaste to Head & Shoulders shampoo. Products from Gillette (Research) include not only its signature razors but also Duracell batteries and Braun and Oral-B brands dental care products.
"This merger is going to create the greatest consumer products company in the world," said billionaire investor Warren Buffett, whose Berkshire Hathaway (Research) is Gillette's largest shareholder with 96 million shares, or about 9 percent of the company.




PURPOSE OF STUDY:

Study of the products of the Proctor And Gamble and the Gillette group products which overlap after the merger having the same usage phases and the effect of the merger on all the products and their sales and other data .

The $57bn acquisition has been conditionally approved provided the companies divest a variety of overlapping assets ranging from toothbrushes to deodorant, the FTC said in a statement.














STATEMENT OF THE PROBLEM:

This merger will face some regulatory scrutiny because many of their products overlap (Crest/Oral-B; Secret/SoftnDri ; Old Spice/Right Guard. when any companies merge they have to explain reasons why to the DOJ/FTC, they usually throw in the rationale that they have to merge to compete or what ever the reason may be."

Procter & Gamble Co. plans to shutter more than half of its 475 distribution centers worldwide as part of a sweeping effort to cut overlapping operations and distill its shipping network following its acquisition of Gillette Co.






REVIEW OF LITERATURE:
The combined company will have more than $60 billion in annual revenues. Here are some facts about the two firms.
1. Cincinnati-based Procter & Gamble was established in 1837 and made its name selling soap and candles to U.S. government soldiers during the civil war.
2. Boston-based Gillette spends around $600 million annually on advertising.
3. In May the razor-maker paid a reported 40 million pounds ($75.4 million) to sign international soccer star David Beckham to a three-year deal as its global face.
4. Procter & Gamble employs a workforce of 110,000 worldwide and has a market capitalization of $141 billion. Gillette employs 29,400 employees worldwide and has a market capitalization of $45 billion.
5. Gillette's profit beat market expectations last October after Hurricane Ivan spurred the buying of Duracell batteries. ($1=.5303 Pound)


QUESTION:
IS PROCTOR AND GAMBLE COMPANY FACING ANY PROBLEM WITH THE MERGER WITH GILLETTE?
HYPOTHESIS:
In the past decade, the retail landscape has turned dramatically from one of primarily regional players to one dominated by a dozen or so key national players, some of which became bigger than Procter itself.
are pushing for the lowest prices possible. And a full truckload of batteries, razors and detergent will cost less than three trucks carrying the same items in partial shipments.
"Their distribution centers will kind of become supermarkets for their products
The distribution centers also could become portals into new retail areas, since Procter and Gillette each had strengths in areas where the other had not. In the United States, for instance, Gillette has a better distribution to home