History of a merge

In November 2004, Jim Kilts called A. G. Lafley at P&Gs Cincinnati headquarters. Kilts, who had been Chairman and CEO of Gillette for 4 years, was pursuit a buyer of the global Boston-based company. Lafley, who had been Chairman and CEO of P&G for over 4 years, was out of the office and had to call him back, unaware of what Kilts was to the highest degree to propose. Lafley questioned Kilts on three topics. First, what was Gillettes price? Kilts said he precious a fair offer.Not $60 per share, but not $50. Jim, Lafley responded, I corporation do the math. Are you thinking Gillette tractionings into P&G stock and options and hold them for an agreed period of time. He would also consider staying with P&G for a year after official merger. Finally, Lafley asked about the description of the natural culture he helped forge during his turnaround of P&G. The P&G culture is more collaborative, sluttish, and competitive than you may know it to be, he said.Three geezerhood later, Lafley met Kiltss personal office in Rye, New York. They spoke the good afternoon and agreed to expand negotiations to include select senior managers. At one points , Kilts asked Lafley why he didnt bring any bankers or lawyers. Lafley said they wont necessary. Kilts, Gillette CFO Chuck Cramb, and vice moderate Ed DeGRaan met with Lafley and his CFO, Clayt Daley, to work out the merger teams. Culture and tone were study issues for Lafley. we were looking for a collaborative culture, he said. In fact, I clear-cut that we were going to be collaborative in the negotiations. We had a friendly kettle of fish here, and there was no reason not to have the cards on the table. Lafley called someone that both he and Kilts respected, Rajat Gupta, former managing director of McKinsey, who urged Kilts to give Lafley an open look at potential cost synergies and a peek at Gillettes planned technological innovations. Kilts agreed.But come December 2005, they halted negotiations, realizing that they couldnt ten-strike an agreement before the upcoming analyst meetings and holidays. Lafley called Kilts back after Christmas. From a strategy standpoint, Lafley considered the acquisition a no-brainer. Both companies would obtain the scale needed to drive the global expansion of its products P&Gs maturation market size was five times Gillettes $11 billion in annual sales versus $2. 2 billion.Together, the feature entity would include 21 billion dollar brands, 16 from P&G and 5 from Gillette. Gillettes brands further migrated P&Gs products portfolio toward high-margin beauty, health and personal oversee categories. The merger would fortify retail customer relationship, especially through the combined knowledge of male consumers, from Gillette, and female buyers, from P&G. And they could leverage respective personal line of credit strengths, such as Gillettes trade-up practices and P&Gs go-to-market expertise, to remedy growth.