EU approves P&G-Gillette takeover
takeover of Gillette on Friday, paving the way for the deal to be
sealed this autumn, reports Simon Pitman.
The European Commission carefully studied the deal for a month and then spent a further two weeks finalising details and ensuring that competition laws were not affected. But for many the pace has been fast, considering that a number of other similar major business takeovers have taken more than six months for a decision to be reached.
Indeed, with this particular deal, the competition authorities had indicated that if a decision had not been made within this time, a new and more comprehensive investigation would have been launched, possibly lasting up to six months.
Rivals and competition authorities had particularly focused on the companies oral care businesses, which were said to have some small areas of cross-over. However, P&G has agreed to off-load its toothbrush business, SpinBrushes.
""When two major consumer product companies merge, we have to ensure that European consumers do not suffer in terms of price competition or product ranges. However, following our thorough investigation, and in view of the remedy offered, we are satisfied that the merger would not harm consumers", Competition Commissioner Neelie Kroes said.
The merger means that Gillette and P&G would own a total of 21 brands, each with an annual turnover of more than $1 billion.
On the back of the EU approval P&G repeated what it has said ever since the announcement of the deal proposal: that it expects all the administrative procedures to be completed by the autumn. Although many experts believed this deadline was over-optimistic, it seems far more likely now.
On July 12, over 90 per cent of shareholders voted in favour of the takeover. This now only leaves approval by the US Federal Trade Commission - a hurdle that most experts say will merely prove to be a formality.
P&G Chairman A.G. Lafley said the news was a positive step: " The EU clearance is a significant milestone as we work to combine two of the world's leading companies to benefit consumers, customers and shareholders," he said in a statement.
Adding further impetus to the deal, leading analysts upgraded their forecasts for P&G at the beginning of last week, citing longer-term strengths. The Prudential raised its weighting for the personal care and consumer products giant from a 'neutral weight' to a 'overweight', stating that the 'time is right' to invest in the company, projecting that return rates on shares have a potential of reaching 17 per cent.
