P&G set for more media clout with $57bn Gillette buyout

by Jennifer Whitehead,, Brand Republic 28-Jan-05, 08:45

LONDON - Household goods giant Procter & Gamble is buying Gillette, owner of the famous razor brand as well as Duracell batteries, in a $57bn (£30bn) deal that will further increase its market dominance and media-buying clout.

The deal was revealed overnight and means that P&G, which owns 16 brands that are worth more than $1bn each, including Pampers and Olay, will add five more billion-dollar-plus brands to its portfolio: Gillette razors, including Mach3 with ads fronted by David Beckham; and Venus; Duracell batteries; Oral-B toothbrushes; and Braun shavers.

P&G has said that after the merger it was looking at slashing 6,000 jobs from its 140,000-strong workforce, about 4% of the total. It said the deal would give it savings of up to $16bn, derived from economies of scale, cutting duplicate costs and driving further efficiencies.

The deal could be good news for the WPP Group, if P&G decides to look at consolidating its media planning and buying after the merger. In the UK, WPP-owned MindShare handles media duties for Gillette, while P&G's business is largely split between Publicis Groupe-owned agencies and those that are part of Grey Global Group -- which is being acquired by WPP.

However, in the US, Grey's MediaCom lost out in a media planning repitch, with Publicis Groupe's Starcom and Aegis Group-owned Carat splitting the work between them.

P&G said that one of the benefits of the deal was the fact that both companies have global scale, with their products being marketed around the world. It also said that both companies have placed a high priority on growth in developing markets and that it plans to accelerate the growth of Gillette brands in such markets as China, Russia, Mexico, Turkey and others.

AG Lafley, chairman and chief executive of P&G, said: "Gillette and P&G have similar cultures and complementary core strengths in branding, innovation, scale and go-to-market capabilities, making it a terrific fit."

The deal will see Gillette chairman and chief executive James Kilts join P&G's board of directors and serve as vice-chairman.

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