In 2005, Proctor & Gamble merged with Gillette Co. in a $57 million deal, creating the world’s biggest consumer-products enterprise. The combination brought the marketing strengths of P&G, whose products are marketed towards women, together with Gillette’s high profit brands which are marketed towards men. News of the merge immediately sent Gillette’s shares up 12 percent; however P&G dropped 2.7 percent. The merge was said to result in the elimination of about 4 percent of the combined workforce of about 140,000. The merger created a company with revenues of more than $60 billion.
P&G has remained one of the most successful consumer products enterprises. In 2006, revenues went up 12.6% and its ranking went up to become the 24th largest corporation in America. Since 2005, stock increased up until around 2009 when the economic crisis hit and stock prices plummeted. However, since the stock market crash, stock prices for P&G have been increasing at a steady rate.
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This is a great example of two companies benefitting from each other. Gillette specializes in men's products, so by merging with Procter & Gamble, the number of customers should increase, increasing consumer demand for P & G. The 2.7% drop in P&G sales should reverse soon as a result.
ReplyDeleteThis is a great example of a "new company" that has emerged. How do you think this will impact their competitiveness against other firms like JnJ or Colgate Palmolive? I was actually shocked that PnG stock went down. Maybe some investors don't think this is a good idea.
ReplyDelete~Maura