Merger Case Analysis



Assessing Procter & Gamble's Acquisition of Gillette

Introduction

The thesis statement of this paper is to evaluate the acquisition of Gillette by Procter & Gamble. The paper will discuss the case of merger and acquisition of Procter & Gamble with Gillette. The aim of this paper is to assess the merger and acquisition of Procter & Gamble with Gillette. The purpose is to evaluate the merger of the two companies in a critical way and have an overview of its pros and cons. The overview of the paper comprise of the nature of merger, assets divest approach, success of the merger and the personal opinion before and after the merger. Mergers and acquisitions enable companies to pool assets for creation of value. In order to gain more control and increase the value for business, mergers and acquisitions require solidifying the activities in a given industry. Success of M&A depends on how well a company consolidates the operations in the market. Tactical fit concern of M&A is to seek profit in the short term, to acquire a company with the objective of increasing its value and then selling it at a higher price. The common factor in both cases is the stimulus that adds value to the acquired company (Neff, 2010).

Body

The merger of Procter & Gamble with Gillette was conglomerate merger. A conglomerate merger occurs when the merger of companies, which have neither the products nor the marketing similarities, but achieved through the merger a greater economic base and a better profit potential. A conglomerate is thus a portfolio of industries, activities and crafts heterogeneous with no real coherence between them. The evaluation of the acquisition premium is therefore based on any tangible synergy with the exception of certain functions such as purchasing. In contrast, synergies intangibles such as managerial know-how, operational best practices and exchange of experience when they are disseminated and shared across the different activities of the conglomerate are effective (Isidore, 2005).

In a recession, companies restructure and optimize their fundamentals (cost reduction, asset divestment unprofitable and non-core decrease in certain budgets, etc) to contain the effects of the crisis. They try to make the best lessons from their journey and the previous wave to improve existing rules and ensure that transactions are more profitable in the future. It is also during this phase of critical thinking emerge ideas and new trends to restart and develop a new wave. Throughout the integration process teams, management should provide clear guidance; communicate regularly and for the sake of transparency. It is thanks to all that she will get an early accession to the new project and the teams make their "mourning" of the past to enter the new era P & G-Gillette.

Although both groups are in North America and claim a culture based on diversity, one of the values ??Gillette is to work as a single team overall while P & G has banned the word and prefers to play its communication the necessary patchwork teams to meet various needs of ...