Thursday, April 17, 2003

Procter & Gamble buys out Wella This isn’t breaking news, but Procter & Gamble recently announced the acquisition of German hair care and fragrance vendor Wella. The closely held company will transfer 77% of the stock to P & G, once it gets regulatory approval. The price is around $6.5 billion dollars. This move strengthens P & G’s hand in three major worldwide markets: In the $34 billion retail hair care product market, P & G now has sales of around $4.5 million a year, through brands like Head and Shoulders, Pantene, Clairol, and Herbal Essence. The company can now add Wella’s sales of around $1 billion from its Wella, Londa, Ultra Sheen, and other products. In the $10 billion professional hair care products, Wella is number two in the world at over $2 billion, an area that P & G is weak in. In the $20 billion fragrance market, the company, even combined, is still a small player at $1 billion. Wella brings its female-oriented Gucci, Montblanc, Escada, and Rochas brands (popular in Europe), while P & G brings its male-oriented Hugo Boss and Lacoste fragrances. Wella also brings a strong expertise in the international market for all these products. Note that P & G is following up on a hair care buying spree. It acquired Clairol from Bristol Myers-Squibb only last year (2002) for around $5 billion. P & G clearly sees an opportunity in all these markets, and is working hard to be one of the key players in each of them. The market segments complement nicely the areas P & G is really big in household cleaning and personal health care. The takeover gives P & G salesmen more products to push and one less competitor to worry about. It also gives them the accumulated brand equity of a 120-year old product line. 3:04:07 PM

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