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The merger between Gillette and Procter and Gamble

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Nicky Colraine Economics 193 4/19/05 "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 Post1 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. ...read more.


Batteries: Duracell is the top selling battery in the world. The Company's range of alkaline batteries includes the Duracell CopperTop, Duracell primary lithium, zinc, air, and metal rechargeable nickel-metal hydride batteries. Oral Care: The Gillette Company offers manual and electric toothbrushes under the Oral-B brand and sells whitening toothpaste under the name of Rembrandt. Small Appliances: Gillette sells electric shavers under the Braun brand and hair Epilators under the Silk-Epil brand. It also sells small household and personal care appliances under the Braun brand. Personal Care: The Company sells shaving complements that include after-shave and shaving cream. It also markets anti-per spirants under the Right Guard, Soft & Dri, and Dry Idea brands. P & G Baby Care - P&G sells diapers, wipes and other baby products under the name Pampers, Luvs, and Bibsters. Beauty Care - P&G sells cosmetics, fragrances, hair care, deodorants/antiperspirants, personal hygiene, and skin care products under the names Old Spice, Cover Girl, Max Factor, Head & Shoulders, Pantene, Oil of Olay, Vidal Sassoon, Pert Plus, Circ, Secret, Zest, Hugo Boss, and Laura Biagotti. Feminine Care - P&G sells sanitary pads and tampons under the names Always and Tampax. ...read more.


At a shareholder meeting, a P&G stakeholder voiced his disgust over his company's complete neglect towards animals, "Every year thousands of rabbits, ferrets, guinea pigs, hamsters, rats and mice are killed to test cosmetic and household products. P&G engages in these tests despite the fact that they are not required by law and despite the fact that more reliable and more humane alternatives do exist." 14 Future: The merger between P&G and Gillette will allow for the company to take on Wal-Mart. P&G is already the world's largest consumer products company, with sales of $51.4 billion last year. 15 According to Financial Times, the deal between the two companies means that bargaining power will be enhanced with big retailers such as Wal-Mart, putting it in a particularly strong position to penetrate harder into emerging markets such as Eastern Europe and Asia.16 However, the acquisition of Gillette with estimated sales of $10.3 billion gives it more sway negotiating sales contracts with large retailers. The merger is also expected to put pressure on competing firms, such as Bic, Unilever, Kimberly Clark, Nestles, and Colgate-Palmolive.17 Furthermore, the merger between the two powerhouses is likely to promote international expansion. The Companies expect to save $14 billion, but t the merger will force the Companies to eliminate of 6,000 jobs. ...read more.

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