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CINCINNATI (AdAge.com) -- Procter & Gamble Co. has agreed to buy Bristol-Myers Squibb Co.'s Clairol hair-care business for $4.95 billion in cash, though tax benefits will reduce the deal's net price to $4 billion for P&G.

The deal, P&G's largest acquisition ever, gives the company its first entry into hair coloring with Clairol's $700-a-million-a-year hair-coloring business, including such brands as Nice 'n Easy, Natural Instincts, Miss Clairol and Hydrience.

In part of the deal likely to draw regulatory scrutiny, P&G, already the U.S. and global leader in shampoos and conditioners, acquires another $900 million a year in shampoo and conditioner sales, including such brands as Herbal Essences, Renewal 5x, Aussie and Infusium. For instance, the deal would push P&G's share of the $1.9 billion U.S. shampoo category to over 44%, more than double that of its nearest competitor, Unilever, which had a19.6% share in the 52 weeks ended March 24, according to J.P. Morgan Securities.

P&G said the deal would give it an opportunity to improve global sales of Clairol brands, which get 75% of their sales in the U.S. market, while P&G generates 70% of its hair-care sales overseas.

P&G expects to generate $200 million in savings by combining marketing, manufacturing and distribution operations.

P&G President-CEO A.G. Lafley said in a conference with financial analysts that the company plans to restore marketing support for the Clairol brands to "historical levels," following what he described as a dip in spending two years ago. P&G estimated it would increase marketing and product development support by around $50 million annually.

True North Communications' FCB Worldwide, New York, handles Clairol hair-coloring brands, while Bcom3 Group's Kaplan Thaler Group, New York, handles the shampoo and conditioner brands.

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