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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (573)	1/28/2005 1:29:01 AM
From: richardred	Respond to of 7254

New twist for Rayovac: Message 20913865 Procter & Gamble Co.'s planned $54 billion acquisition of Gillette Co. would not only create the world's largest consumer goods company, it would also likely create global-size headaches for both companies' rivals. NEWS FOR CO P&G, Gillette deal bad news for rivals Updates, advisories and surprises Earnings Surprises: Cigna, Spieker, Compuware after the bell More news for CO Colgate-Palmolive Co. (CO: news, chart, profile) , a direct competitor of P&G (PG: news, chart, profile) and Gillette (G: news, chart, profile) , already is locked in a brutal battle for market share and incremental volume growth. Many of the New York company's brands already compete head-to-head with P&G and Gillette's wares on retailers' shelves. Colgate toothpaste and Speed Stick deodorant, for example, fight for customer's dollars against P&G's Crest toothpaste and Right Guard deodorant from Gillette. The companies also vie for shelf space and favorable terms from the world's retailers, especially the biggest -- Wal-Mart Stores Inc. A merger of P&G and Gillette would not only bring Colgate's two biggest direct competitors together under one corporate umbrella, it also would combine their already considerable advertising, marketing and research and development resources and talent. Moreover, P&G would expand into new product categories in which it currently does not compete: Gillette owns the premium razor and blade brand, and Duracell, the premier battery brand. P&G would also add Gillette's number-one oral care brand, Oral B -- a direct strike at Colgate's own oral care business. Those product- and brand-portfolio expansions could potentially give P&G more leverage in its dealing with Wal-Mart and other retailers. The acquisition also would add about 20 percent to P&G's sales virtually overnight in a business where sales growth is ever harder to come by and increasingly driven by volume gains and foreign currency exchange. To put that in perspective, Gillette and Colgate are each about $10 billion companies in terms of annual revenue. A P&G acquisition of Gillette would be comparable to adding the entirety of Colgate's sales to P&G's top line. The acquisition would also send a salvo across the bows of Gillette's rivals in the razor, blades and battery business. Energizer Holdings Inc. (ENR: news, chart, profile) holds it own with its eponymous batteries and Schick and Wilkinson razor and blades brands. But with less than $3 billion in annual revenue, it would find itself doing battle with Gillette as part of a $60 billion global conglomerate. Rayovac Corp. (ROV: news, chart, profile) for its part, would be even more hard pressed. Rayovac batteries lag in brand power behind both Duracell and Energizer, as does its Remington razor business. And with less than $1.5 billion in sales, the company suddenly would find that the distance between its own resources and those of Gillette's had grown exponentially. marketwatch.com