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P&G snatches Wella for $7bn
FRANKFURT, Germany (Reuters) -- Procter & Gamble said on Tuesday it would take control of German hair care firm Wella in a 6.5 billion euro ($7.02 billion) deal, giving the U.S. consumer goods giant a boost against French arch-rival L'Oreal. P&G, whose interest in buying Wella was first reported by Reuters a month ago, said it had reached agreement with the German group's family owners to buy their majority stake and would launch an offer to remaining shareholders. P&G said in a statement it would offer 92.25 euros for each of Wella's 44.1 million ordinary shares and 61.5 euros for its 23.38 million non-voting preference shares, valuing the bid at 5.4 billion euros. P&G would also take on Wella's 1.1 billion euros of debt. The deal, which adds to one of the four business lines P&G is focusing on as an area of growth, comes less than two years after the U.S. group bought the Clairol hair care business from Bristol-Myers Squibb for $4.95 billion. Wella, global number two after L'Oreal in professional hair care business, would give P&G's strength in the retail segment a new gloss, the U.S. company said. "This acquisition is a great strategic fit given P&G's leadership and proven strength in its core hair care business,'' P&G Chief Executive A.G. Lafley said in a statement. Wella management sourWella's fiercely independent management responded coolly, saying the company would be better off alone. "From a business perspective the announced transaction is not a necessary step,'' Wella said in a statement, adding it respected the family owners' decision to sell. The company said it reserved the right to advise minority shareholders on whether to accept the offer, but given the enthusiastic reaction of the market, its chances of derailing the deal looked slim, bankers said. The ordinary shares in Wella surged 20 percent, matching P&G's bid premium over Monday's close, while the preference shares inched up over two percent towards the P&G offer. P&G's feat is a bitter defeat for its smaller German rival Henkel, which has long courted Wella in its drive to gain enough size to compete in the top league of consumer cosmetics. Henkel made an informal approach of 80 euros per share for Wella last October, but that offer was rejected by the family as too low. Sweetening the defeat, Henkel's stock took off due to relief it would not stretch itself to overpay for Wella. It also stood to make a handsome profit on the 6.86 percent stake in Wella it revealed last week. Henkel shares were up 5.3 percent at 55.38 euros by 0926 GMT. The deal with the family shareholders comes after Henkel's announcement brought months of semi-public manoeuvring by a number of interested bidders to a head, with Anglo-Dutch group Unilever NV/Plc also believed to have been interested.
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