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Essay on Microeconomics
Some of the recent activities of P&G outside U.S.A are that P&G has agreed to purchase Gillette Company in a stock transaction valued at about $54 billion. Under the terms of the transaction, Proctor and Gamble will exchange 0.975 of its shares for each share of Gillette outstanding. Based on recent P&G closing prices, the deal values Gillette at $53.94 per share, a premium of about 17.6 percent over the company's recent price. The transaction still requires regulatory approval. The acquisition will provide Proctor and Gamble with a larger product line, increasing its clout with retailers and its presence on supermarket shelves. Combined, P&G and Gillette will have 21 brand with more than $1 billion in annual sales each. P&G expects to realize revenue and cost synergies of about $14 billion to $16 billion from the merger.
Another activity of P&G is that Coca-Cola and P&G formed a juice and snacks company that is expected to generate annual sales of about $4 billion. The new joint venture company, as yet unnamed, will bring together about 40 brands including Coca-Cola's Minute Maid and P&G's Pringles and Sunny Delight, an orange flavored drink. It will have 6,000 employees and 15 manufacturing facilities and predicts yearly sales could grow to $5 billion within two years. P&G is expected to benefit from Coca-Cola's massive global distribution system of 16 million outlets around the world. In the United States alone, that represents a 10-fold increase for Pringles, from the current 150,000 points of distribution to at least 1.5 million. Coke, which has seen slowing sales of its core, carbonated soft drinks, gains access to P&G's research expertise. The company holds more patents on food and beverage technology than the three largest U.S. food companies combined.........
