The Sale to Procter & Gamble

On February 28th 2005, Gillette was sold to Procter and put on the line for $57 billion.Gillette is establish in capital of Massachusetts and was founded in 1901. It sells products in over 200 countries in 31 manufacturing plants in 14 countries. It is one of the leading manufacturing firms left in capital of Massachusetts.Procter and Gamble is based in Cincinnati, established in 1837 by William Procter and James Gamble and was compound in 1905. To date it has sold more(prenominal) than 300 brands of products in more than 160 countries.Because of the competition in this industry, Procter and Gamble thought it was a level-headed idea to buy out Gillette. They had already noticed that Walmart had the biggest percentage of Procter & Gambles revenue (17%) and this would grow to 30% after the merger. Also, there would be a cost savings of $14 to $16 billion a year and a 1% increase in sales offshoot after the merger.Key Issues One of the key issues is that 6,000 employees of Gillette would be losing their jobs.Another key issue is that good luck packages from these kinds of mergers have been seen to be too high. For example, when Manulife Financial Corporation merged with fanny Hancock Financial Services, the Chief Financial Officer from John Hancock, David DAlessandro, received a package of $16.4 million. When Bank of America bought Fleet Boston Financial Group, Chad Gifford (CFO of Fleet Boston) got $16 million.Now, Gillettes James Kilts is getting a severance package of $30 million and could earn $172 million in cash and stock. In fact, $50 million of the compensation package was right away tied to the merger. A lot of academics did not agree with this arrangement because they swear it should be tied to the performance of the company and not to the merger.Another issue is that employees of Gillette were already complaining about unfair working conditions and retirees were going to have to abide more for healthcare after the merger.