P&G’s Acquisition of Gillette

Boy meets Girl

• To become world’s largest consumer products company.

• Benchmarking to HUL

• Design the worlds best class sales and distribution model .

• To enhance P&G’s Strong and diversified brand portfolio.

• To cut down the costs to ensure productivity gains.

• To make faster sales growth• To gather considerable bargaining power.

• While P&G’s strength lay in women’s personal care products with brands such as Olay, Always, Tampax and Max Factor,

• Gillette’s strength lay in the men’s grooming category.• By acquiring Gillette, P&G would be adding the world’s best shaving products to its

portfolio.

Rationle behind Acquisition

• P&G's offer of $57 billion for the other American consumer-goods firm

•  an 18% premium on its stockmarket value

• Warren Buffett, that most renowned of American investors, who could be considered the father of the bride through his 9% stake in Gillette, cooed delightedly that the proposed merger

• P&G may believe that it can squeeze more value out of Gillette's bran

• $50 valuation per share

P & G’s Strategy

• Warren Buffett, that most renowned of American investors, who could be considered the father of the bride through his 9% stake in Gillette, cooed delightedly that the proposed merger.

• Rejected the offer of $50 valuation

• Agreed on .975 P&G shares per Gileete Share from 0.915 with the help of mediators

Gillette

Strategy of Integrative Negotiation

• Emphasis on Win-Win Situation• Integrative Goal• Focus on Commonalities • Objective Criteria For Standard of performance• P & G and gilette together have $180 billion over

the globe.

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The Bankers: $ 30 m each for confirmation of the deal where they got the money if the deal goes.

Warren BuffetPast owner 10% of GilletteCurrent owner of 3.5% of P&G.

It’s a Dream Deal

Arbitrator

3D Negotiation

Mediator

Warren Buffet

Bankers

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Lesson Learned1. Hybrid deal can bring big benefit for target’s

shareholder with minimum tax.

2. Investment Bank is necessary for M&A deals.

3. Buffet’s blessing has strong influence.

4. CEO’s compensation should always be measured by the value he/she creates.

5. M&A can bring more power to negotiate with large retailers (Wal-Mart).

6. Synergy opportunities in M&A: cost efficiency, increase market power, complimentary R&D, etc.