Procter & Gamble Co. is buying Clairol for $4.95 billion in cash in a deal that would add the Clairol and Herbal Essences brands to P&G's lineup of hair care products like Pantene and Head & Shoulders.
The deal announced today would be P&G's biggest acquisition ever and comes as the consumer products giant is cutting thousands of jobs and a number of brands in the food business in an effort to boost profits.
Procter is buying the Clairol business from Bristol-Myers Squibb Co., which put it up for sale last September so it can focus on its drug business.
Clairol is a world leader in hair products and would give P&G a bigger position in the hair coloring business that has grown more important as baby boomers turn gray.
Subject to Regulatory Approval
The acquisition is expected to contribute about $1.6 billion in annual sales to P&G's $7.4 billion beauty care business.
It is unclear how many of Clairol's 4,000 jobs worldwide would be eliminated by P&G, which has its own distribution, research and manufacturing 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 Vidal Sassoon brand. But it had been reluctant to introduce an entirely new 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'Oreal controls 50 percent.
The transaction would be subject to approval by regulators. Some analysts have questioned whether the deal will be approved because of P&G's increasingly large stake in the hair care business.
In early trading on the New York Stock Exchange, P&G shares were down $2.38 at $65.10 while Bristol-Myers Squibb gained 60 cents to $56.60.