Procter & Gamble in Deal for Clairol Unit
C I N C I N N A T I, May 21 -- Procter & Gamble Co. is buying Clairol for$4.95 billion in cash in a deal that would add the Clairol andHerbal Essences brands to P&G's lineup of hair care products likePantene and Head & Shoulders.
The deal announced today would be P&G's biggest acquisitionever and comes as the consumer products giant is cutting thousandsof jobs and a number of brands in the food business in an effort toboost profits.
Procter is buying the Clairol business from Bristol-Myers SquibbCo., which put it up for sale last September so it can focus on itsdrug business.
Clairol is a world leader in hair products and would give P&G abigger position in the hair coloring business that has grown moreimportant as baby boomers turn gray.
Subject to Regulatory Approval
The acquisition is expected to contribute about $1.6 billion inannual sales to P&G's $7.4 billion beauty care business.
It is unclear how many of Clairol's 4,000 jobs worldwide wouldbe eliminated by P&G, which has its own distribution, research andmanufacturing capabilities. But P&G said it expects to save about$200 million in costs from combining the operations.
P&G has been test-marketing coloring products through its VidalSassoon brand. But it had been reluctant to introduce an entirelynew hair-coloring brand because of the high costs.
Clairol controls 39 percent of the U.S. hair-coloring market,according to market research concern A. C. Nielsen; L'Orealcontrols 50 percent.
The transaction would be subject to approval by regulators. Someanalysts have questioned whether the deal will be approved becauseof P&G's increasingly large stake in the hair care business.
In early trading on the New York Stock Exchange, P&G shares weredown $2.38 at $65.10 while Bristol-Myers Squibb gained 60 cents to$56.60.
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