One deal lost but P&G wins

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The stock market dealt brusquely with Procter & Gamble Co. CEO Durk Jager last week. His ambition -- a mega-deal involving Warner-Lambert and American Home Products that would have transformed P&G into a pharmaceuticals powerhouse -- panicked investors.

They sent P&G's stock price into a decline that wiped billions of dollars from the company's market capitalization. Mr. Jager was forced to end the talks. Hardly a great day at the office.

Overreaching? Most likely. A defeat? Definitely not.

In the universe of global marketers in which P&G operates, Mr. Jager has changed its image -- perhaps forever. As marketers, and industries, consolidate, no deals will be contemplated -- even on the peripheries of P&G's empire and product mix, without the m&a teams and investment bankers at least thinking about P&G. P&G is no stranger to smaller acquisitions. Its Warner-Lambert/AHP idea, though a failure, put it in the big leagues. When word surfaced that Mr. Jager had also explored an acquisition of Gillette Co. -- a deal much closer to P&G's traditional marketing strengths -- it confirmed P&G's new status as a hunter.

As P&G's Organization 2005 program goes about rebuilding marketing, sales and earnings momentum, and it shakes off its old image as a ponderous giant, its managers and employees have to be newly energized. There is a significant deal out there that won't mortgage its future and alarm earnings-conscious investors, one that will bring important new businesses or brands into the P&G stable. And that's something for P&G's present and potential rivals to think about.

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