Procter & Gamble squeezes toothpaste operations for Gillette buy

Certain of P&G's smaller dental care operations are being
divested as the company readies to seek anti-trust approval in both
Europe and the US. But as acquisition deadlines draw ever closer,
opposition in Gillette's home town of Boston continues to mount,
reports Simon Pitman.

According to a report in the Wall Street Journal, P&G​ is readying to divest some of its toothpaste, toothbrush and dental-floss product lines in an effort to minimize a small amount of product cross-over that currently exists between the two companies.

P&G's leading toothpaste brand is Crest, which is major player worldwide. Meanwhile, Gillette​ increased its dental care operations last year, when it purchased the Rembrandt teeth-whitening brand, which became a part of the company's Oral-B portfolio.

Although Gillette's Oral-B brand is significantly smaller than its mainstay razor and battery business, EU authorities are expected to be particularly thorough in their investigation as to whether or not P&G will be too dominant in the oral care category as a result of the Oral-B brand.

The planned divestures, which are estimated to be valued at a few hundred million dollars, are considered to be relatively insignificant, especially when put in the context of the acquisition's estimated $57 billion price tag.

At the beginning of this week P&G said that the initial impact of the purchase is expected to impact its profits for the coming financial year. In a filing to the Securities and Exchange Commission, the company said it expected that per-share results will be impacted by between 25 and 35 cents in the first year and between 5 and 10 cents in the second year.

But the company said that by the third year it expected that the impact of the Gillette business would have a positive affect on the company's results, adding between 1 and 5 cent a share to earnings.

P&G said that it is "confident that combining P&G and Gillette will create substantial and sustainable shareholder value over the long term"​, adding that the company, "must focus on the successful integration of the Gillette business and delivery of growth and cost synergies, while maintaining momentum in the core businesses".

But as P&G pushes ahead with plans aimed at fine-tuning the deal, Massachusetts Secretary of State William Galvin is still plowing ahead with his own investigation of the acquisition, which he says under-values Gillette by more than $15 billion.

Galvin is claiming that hundreds of jobs will be lost in the state as a result of the acquisition and proposed synergies. He is also contesting the fact that Gillette chairman James Kilts stands to make an estimated $165 million if the sale goes ahead.

The recent announcement that Kilts is also joining the board of the New York Times Company, which owns local paper The Boston Globe, has only served to stir controversy in Massachusetts even further. Media reports say that Kilts' election to the board may risk the newspapers ability to report on the acquisition process in an impartial manner.

Gillette shareholders are due to give their vote on the acquisition on July 12.

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