P&G; Nears Deal to Buy Gillette

Procter & Gamble Co. has agreed to acquire razor and battery maker Gillette Co. for $57 billion in a stock-and-cash deal that would create the world’s largest consumer-products company, the companies said Thursday.

If approved by regulators, the deal would bring together Gillette’s Duracell batteries, Right Guard deodorant and razor brands and P&G;’s Tide detergent, Clairol and Pantene hair products and Folgers coffee.

The combined company would have more than $60 billion in annual revenue.

That would vault Cincinnati-based P&G; over Anglo-Dutch giant Unilever as the world’s largest consumer-products maker by revenue, giving the combined entity considerable leverage at a variety of stores, including discounters and grocers.

The deal calls for P&G; to pay 0.975 of its shares for each Gillette share.

Based on P&G;’s closing price of $55.32 on Thursday, the deal values Boston-based Gillette at about $54 a share, an 18% premium over its closing price of $45.85.

Gillette executives did not return calls seeking comment, and P&G; spokeswoman Linda Ulrey declined to comment.

Shares of Cincinnati-based P&G; have risen nearly a third since 2003 as the company’s strong stable of global brands has powered consistent profit and sales growth.

That rise has given the consumer-products behemoth plenty of stock currency to pursue acquisitions.

Gillette Chairman and Chief Executive Jim Kilts would be named P&G; vice chairman with responsibility for Gillette, sources said.

The company would remain headquartered in Cincinnati. The companies are expected to close the transaction sometime this fall.

Richard Hastings, a retail economist at Variant Research Corp., said it remained unclear whether the deal would give P&G; enough clout to dictate things such as pricing at large retailers including Wal-Mart Stores Inc.

The deal would give P&G; some better trade promotional strength while eliminating a few administrative costs and duplication, Hastings said.

“I don’t think the Wal-Mart effect is the main driver,” he said.

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Bloomberg News, Associated Press and Reuters were used in compiling this report.