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Procter & Gamble buys Gillette

Procter & Gamble made an announcement today, simultaneously in Cincinnati and Boston, that it has signed a deal to acquire Massachusetts-based Gillette for $57 billion, making it the largest deal in P&G's history.

Gillette, founded in 1901, brings in the majority of its revenue from razors and related shaving products, though it does also own Duracell batteries and Oral-B toothbrushes. The combined company will boast more than $60 billion in annual revenues, giving it increased leverage at stores ranging from discounters to grocers.

Under terms of the agreement, unanimously approved by the board of directors of both companies yesterday, P&G has agreed to issue 0.975 shares of its common stock for each share of Gillette common stock. Based on the closing share price of P&G and Gillette stock on January 27, 2005, this represents an 18% premium to Gillette shareholders.

P&G will acquire all of Gillette's business, including manufacturing, technical and other facilities. The transaction, which is subject to certain conditions including approval by Gillette's and P&G's shareholders and regulatory clearance, is expected to close in Autumn 2005.

In addition, P&G and its subsidiaries plan to buy back $18 to $22 billion of P&G's common stock during the next 12 to 18 months.