P&G AND GILLETTE

Merger RATHER THAN Acquisition

ABOUT
On 28th Jan 2005 , P&G purchased Gillette in a $54 Billion stock deal
in which 40% was paid in cash and 60% in stock.

REASONS FOR ACQUISITION

Gillette was strong in emerging markets like India and Brazil where P&G has always
been outperformed by Unilever.
P&G is already the worlds largest consumer products company, But the addition of
Gillette gives it new clout with retailers, including the worlds largest, Wal-Mart.
 P&G GILLETTE

Origin- Cincinnati, Ohio

origin - Boston, Massachusetts.
strength- Strong Distribution Strength - Strong market tactics
channel
Weakness - Deals only with
Weakness - Weak influences in male products.
markets like - India, Brazil, e.t.c. Products - Gillette, Oral-B,
Products - Head & Shoulder, Duracell
Olay, Pampers, Tide Legalfinancial Counsellor- UBS
& Goldman Sachs
Legal financial counsellor -
Merrill Lynch & Co.
 CHALLENGES
Enquiries in Massachusetts -
Gillette was facing enquiry in its
home state by US Environmental
Protection Agency. The enquiry was
regarding discharge of chlorinated
VOCs, which was slightly above the
permitted level.

Enquiries in the deal of P&G with

Gillette - Oce of secretary of
states, Massachusetts had launched
a probe in the role of both Goldman
Sachs and UBS in providing a fair
deal price for Gillette.
 SOLUTIONS
In case of discharging of
Chlorinated VOCs, P&G
came up with the solution to
establish a new treatment
plant to treat the waste water
before draining it.
With the team of legal
attorneys, Goldman Sachs and
UBS justified the worth of
Gillette($57 billions) by
explaining the market scenario
at that time.
 CHALLENGES
Retaining top talents of Gillette-
Most important problem for P&G
was to retain the existing skilled
employees of Gillette.

Incorporating superior production

technology from both companies-
P&G was struggling to establish
best production method so that
companies could merge their best
processes and talent into one profit-
boosting entity.
 SOLUTIONS
To retain top talent of talent of
Gillette, P&G communicated a
message of inclusion Merge
rather than Acquisition.
Instead of rating Gillette
employees on performance as
normal, during the corporate
integration, P&G gave the
Gillette employees a year
before they would review
performance and tie bonuses
to the outcome.
SOLUTIONS
P&G took its time to research, they
formed 100 integration teams
globally. Typically, each team would
have two executives, one from each
company, who were responsible for
similar functions.
P&G emphasised the goal of joining
the best of both companies. The idea
of replacing under-performing P&G
employees with better-performing
Gillette talent was a bold strategy for
this promote-within company. It
paid o: P&G leaders were
supportive of this initiative, and
most all employees found motivation
in becoming even better by learning
from the best talent at Gillette.
RESULTS
They managed to retain 90% of top management level
employees as they accepted their new jobs. It was better than
average buyer could retain.
P&G met their revenue and cost goals within a year and
enjoyed ongoing growth.

THANK YOU..

-HIMANSHU SHEKHAR
BFT-6