Procter & Gamble said to be approaching final stages of bidding

By Simon Pitman

- Last updated on GMT

Procter & Gamble said to be approaching final stages of bidding

Related tags Hair care brands Procter & gamble

Both Coty and Henkel have made bids to buy separate parts of the beauty business that Procter & Gamble currently has for sale, according to unconfirmed reports.

Previously Revlon, Coty and Henkel were tipped as the top prospective bidders, but as as the process draws to its conclusion,  a Reuters report claims that it is Coty and Henkel that have made serious bids for different parts of the business.

New York-based Coty, which is focused on fragrances and luxury cosmetics, is said to have submitted specific bids for both the parts of P&G’s fragrance and cosmetics business that are for sale.

Likewise, Germany-based Henkel, which is a big player in the European contract manufacturing and own-brand business, is said to have made an offer for the P&G hair care brands that are under the hammer.

Rumours send share prices rising

The Reuters news concerning the bidding process triggered interest from investors, with shares in P&G closing yesterday up 1.54% to $78.91 a share.

Financial analysts estimate that the bidding process, which could include up to 100 brands, could bring in up to $12bn in revenues for P&G, which has witnessed declining revenues and profits on the back of an over expanded product portfolio.

P&G executives have described the brands it is putting up for sale as being ‘none-core’ and is aiming to refocus on its core beauty brands, which include skin care brands such as Olay and SK-II, hair care brands such as Pantene and Head & Shoulders, and fragrances such as Escada and Lacoste.

Will celebrities or fashion brands get the boot?

Currently the P&G beauty and personal care brand portfolio includes 34 principle brands, including celebrity names such as Christina Aguilera Fragrances and Naomi Campbell, and fashion brands such as Hugo Boss and Lacoste Fragrances.

Besides Wella, big hair care brands include Head & Shoulders, Nice ‘n Easy, Vidal Sassoon and Herbal Essences.

But its two biggest brands, and the ones P&G is tipped to hang on to for further development, are the Pantene hair care range and Olay skin care.

Outlook is tough

For its most recent second quarter, the company reported net sales down by 4% to $20.2bn, a figure that was impacted by currency translations and a 1% fall in organic sales for its hair, beauty and personal care division – the only one of its four divisions to see a decline.

The company said that the decline was mainly driven by a fall in sales in the Prestige and Skin and Personal Care categories, as demand for products such as Olay dropped.

Looking ahead to full year 2015 sales, the company is predicting that revenues will fall by 5%, while net earnings will decline by 12%.

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