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CORPORATE AMERICA P & amp;G, Gillette must floss out kinks before merger



Published: Tue, February 1, 2005 @ 12:00 a.m.



A Gillette deodorant brand may have to be sold to meet antitrust regulations.

CINCINNATI (AP) -- Procter & amp; Gamble Co. likely will be forced to sell a Gillette Co. deodorant brand and perhaps a line of toothbrushes to get approval from government antitrust regulators for its $57 billion purchase of Gillette, analysts said Monday.

Regulators are likely to look closely at whether the deal would give Procter & amp; Gamble a competition-squeezing market dominance with P & amp;G's Old Spice deodorant and Gillette's Right Guard and Gillette Series deodorants, analysts said. P & amp;G's Crest toothbrushes and Glide dental floss along with Gillette's Oral-B toothbrushes and floss also could raise concerns, they said.

"They would have to work out some arrangement on the toothbrushes and the dental floss," said Jason Gere, an analyst in New York with A.G. Edwards & amp; Sons Inc. "It's a choice between Crest and Oral-B."

Brand selling

The combined company might have to jettison Gillette's Oral-B Rembrandt line of teeth whitening products because of P & amp;G's similar Crest Whitestrips line, Gere said.

Right Guard might be a more likely choice for divestiture than P & amp;G's Old Spice, which has been revitalized in recent years and is selling well among 18- to 25-year-olds, Gere said.

Right Guard and Old Spice are among the top three deodorants in market shares, said Bill Schmitz, an analyst in Greenwich, Conn., with Deutsche Bank North America.

"There's going to be some brand divestiture," Schmitz said. "One of those has got to go. I'm not sure which one."

Spokesmen for P & amp;G and Gillette said Monday that they could not comment on what regulators in the United States, Europe, Asia and elsewhere might do. The companies say they hope the deal, P & amp;G's biggest acquisition in its 167-year history, can be closed this fall.

"Obviously, our goal is to keep the entire business. We have limited overlaps in many of the combined product categories," P & amp;G spokesman Doug Shelton said.

A likely deal

The overall combination of the two companies -- creating a consumer products behemoth with $60 billion in yearly worldwide sales -- likely will be approved because they have only a few overlaps in the product lineups, analysts and other deal-watchers said.

Gillette's strength in razors, batteries and men's grooming largely complements P & amp;G's product lineup with relatively little duplication, said Dan Dalton, a former dean of Indiana University's Kelley School of Business who is now director of the business school's Institute for Corporate Governance. Dalton said he sees no deal-breakers in the mix.

"While there are going to be a few areas of overlap, I don't think it'll be enough to undermine the whole deal," said Dan Kiley, president of Retirement Capital Advisors Inc., a suburban Cincinnati investment firm which owns 1.4 million shares of P & amp;G stock.

The Justice Department and the Federal Trade Commission share antitrust enforcement authority in the United States. It hasn't been decided which agency will scrutinize the P & amp;G-Gillette proposal, said Gina Talamona, a Justice Department spokeswoman.

Talamona declined to discuss what aspects of the deal federal regulators might focus on.

The Justice Department has examined deals in recent years in which P & amp;G bought the Tambrands tampons business and the Clairol and Wella hair-care products operations.




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