History of a merge

In November 2004, Jim Kilts called A. G. Lafley at P& angstrom unitGs Cincinnati headquarters. Kilts, who had been death chair and CEO of Gillette for 4 years, was quest a buyer of the global Boston-based comp any. Lafley, who had been Chairman and CEO of P& deoxyadenosine monophosphateG for over 4 years, was out of the authorisation and had to call him back, unaware of what Kilts was about to propose. Lafley questioned Kilts on three topics. First, what was Gillettes price? Kilts verbalise he wanted a delightful offer.Not $60 per share, but not $50. Jim, Lafley responded, I can do the math. Are you view Gillette holdings into P& angstrom unitG origination and options and hold them for an agreed period of time. He would also consider staying with P& group AG for a year aft(prenominal) official unification. Finally, Lafley asked about the description of the natural culture he helped forge during his regression of P&G. The P&G culture is more collaborative, open, and warlike than you may know it to be, he said.Three age later, Lafley met Kiltss individualised office in Rye, New York. They spoke the entire good afternoon and agreed to expand negotiations to accept involve senior managers. At one points , Kilts asked Lafley wherefore he didnt bring any bankers or lawyers. Lafley said they wont necessary. Kilts, Gillette CFO Chuck Cramb, and vice death chair Ed DeGRaan met with Lafley and his CFO, Clayt Daley, to work out the merger teams. Culture and tone were major issues for Lafley. we were facial expression for a collaborative culture, he said. In fact, I decided that we were going to be collaborative in the negotiations. We had a chummy deal here, and there was no land not to have the cards on the table. Lafley called someone that both he and Kilts respected, Rajat Gupta, origin managing director of McKinsey, who urged Kilts to give Lafley an open envision at potential cost synergies and a peek at Gillettes plotted technological inn ovations. Kilts agreed.But come December 2005, they halted negotiations, realizing that they couldnt strike an agreement before the forthcoming analyst meetings and holidays. Lafley called Kilts back after Christmas. From a strategy standpoint, Lafley considered the acquisition a no-brainer. some(prenominal) companies would obtain the scale needed to claim the global expansion of its products P&Gs developing trade size was five times Gillettes $11 billion in yearbook sales versus $2. 2 billion.Together, the combine entity would include 21 billion dollar brands, 16 from P&G and 5 from Gillette. Gillettes brands further migrated P&Gs products portfolio toward high-margin beauty, health and personal care categories. The merger would fortify retail customer relationship, especially through the combined knowledge of male consumers, from Gillette, and female buyers, from P&G. And they could leverage respective blood strengths, such as Gillettes trade-up practices and P &Gs go-to-market expertise, to remediate growth.