The Procter & Gamble (P&G)-Gillette Merger

Strategic Management|Management Strategy |Business Strategy Case Study|Business Strategy|Case Study|Case Studies

ICMR HOME | Case Studies Collection

Case Details:

Case Code : BSTR159
Case Length : 19 Pages
Period : 2005
Organization : Gillette, Procter and Gamble
Pub Date : 2005
Teaching Note : Available
Countries : USA
Industry : FMCG

To download The Procter & Gamble (P&G)-Gillette Merger case study (Case Code: BSTR159) click on the button below, and select the case from the list of available cases:

Business Ethics Case Studies | Case Study in Management, Operations, Strategies, Business Ethics, Case Studies


Buy With PayPal

Amount to be paid:

Prefer to pay in another currency ?
Select Currency for Payment

Exchange Rates: Click Here
Delivery Details: Click Here


For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Shipping & Handling Charges extra

Business Strategy Case Studies
Case Studies Collection
Business Strategy Short Case Studies
View Detailed Pricing Info
How To Order This Case
Business Case Studies
Case Studies by Area
Case Studies by Industry
Case Studies by Company

Custom Search

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Chat with us

Strategic Management Formulation, Implementation, & Control, 12e

Please leave your feedback

Leave Your Feedback

ICMR India ICMR India ICMR India ICMR India RSS Feed

<< Previous


Background Note


P&G was established in 1837 when candle maker William Procter and his brother-in-law, soap maker James Gamble merged their small businesses. They set up a shop in Cincinnati and nicknamed it "Porkopolis"because of its dependence on swine slaughterhouses. The shop made candles and soaps from leftover fats. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of $1 million. The company introduced Ivory, a floating soap, in 1879 and Crisco, the first all-vegetable shortening, in 1911.

In the 1940s and 1950s, P&G embarked on a series of acquisitions. It acquired Spic and Span (1945), Duncan Hines (1956), Chairman Paper Mills (1957), Clorox (1957; sold in 1968) and Folgers Coffee (1963)...

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

The Consumer Goods Industry in the Early 2000s

The consumer goods industry grew rapidly from the 1950s through the 1990s, thanks to the launch of new products from frozen foods to disposable diapers. It was a period of growing population and increasing disposable incomes. Products were marketed based on the concept of mass marketing. However, in the early 2000s, slow sales growth, increasing costs of inputs, emergence of private labels, lower margins, difficult price negotiations, and increasing diversity of channels, choices, and consumer types posed new challenges for this $ 2 trillion plus industry...

The Acquisition

As per the P&G and Gillette merger deal, P&G would exchange 0.975 shares of P&G common stock for each share of Gillette. It represented an 18% premium to Gillette shareholders based on the closing share prices on January 27, 2005. However, the merger was subject to approval by the shareholders of both Gillette and P&G. The merger was expected to get regulatory clearance by 2005. P&G planned to buy back $18-22 billion of its common stock immediately after the merger. The buy back process could take around 18 months to complete. This would make the deal structure a 60% stock and 40% cash deal, although on paper it was a pure stock-swap.

According to marketing guru, Al Ries, "The extra 18% premium paid by P&G for Gillette's stock is going to make it 18% more difficult for the deal to pay dividends to stock holders."P&G would have to borrow funds to finance the planned repurchase of its stock. In light of this move, credit rating agencies put both companies under a review for a possible downgrade. S&P placed all ratings for P&G on Credit Watch with negative implications based on the likelihood that P&G's leverage would increase significantly due to the merger. As of September 30, 2004, P&G had debts of $21.4 billion and Gillette of $3.1 billion...

Excerpts Contd... >>

Custom Search

Economics for Managers Textbook
Textbooks Collection

Economics for Managers Workbook
ICMR books Collection

Case Studies in Business Strategy Volume VI

Case Studies in Business Strategy
e-Book on Business Strategy

Case Study Volumes Collection


Case Studies Links:- Case Studies, Short Case Studies, Simplified Case Studies.

Other Case Studies:- Multimedia Case Studies, Cases in Other Languages.

Business Reports Link:- Business Reports.

Books:- Textbooks, Work Books, Case Study Volumes.