Procter & Gamble Co said on Friday it agreed to acquire Gillette Co for about $57 billion in stock, creating a dominant consumer products manufacturer that would hold unprecedented sway over retailers.
The deal, if approved, would unite two iconic US producers of household goods ranging from Pampers diapers to Tide detergent to Gillette razors.
The combined company would boast more than $60 billion in annual revenues, vaulting P&G over Unilever as the world's largest consumer products maker and giving it unprecedented leverage at stores ranging from discounters to grocers.
Terms of the transaction call for P&G, based in Cincinnati, to swap 0.975 shares of its stock for each Gillette share, the companies said. That values Gillette, based in Boston, at $53.94 per share, a nearly 18 per cent premium to its closing stock price of $45.85 on Thursday.
P&G also announced plans to buy back between $18 billion and $22 billion of the company's stock within the next 18 months. Billionaire investor Warren Buffett, who currently owns about nine per cent of Gillette's stock, said he would purchase stock to own 100 million shares of P&G by the time the deal closes, expected sometime this fall.
P&G said it would achieve revenue and cost synergies of between $14 billion and $16 billion from the transaction, which would also result in the loss of about 6,000 jobs, or four per cent of the firms' combined workforce.
{{/usCountry}}P&G said it would achieve revenue and cost synergies of between $14 billion and $16 billion from the transaction, which would also result in the loss of about 6,000 jobs, or four per cent of the firms' combined workforce.
{{/usCountry}}The consumer products powerhouse also raised its annual sales growth target to five per cent to seven per cent, from four per cent to six per cent.