Monday, May 21, 2001

P&G said to be near Clairol deal

By Andrew Ross Sorkin
The New York Times

        Procter & Gamble is close to reaching an agreement to acquire the Clairol hair-care business from Bristol-Myers Squibb for about $4.95 billion, executives close to the transaction said late Sunday.

        If a deal is reached, Cincinnati-based P&G would add the Clairol, Herbal Essences and Nice 'n Easy brands to its own lineup of hair-care brands, including Head & Shoulders, Pantene and Pert. An announcement is expected today, the executives said, barring last-minute snags.

        The transaction would be subject to approval by regulators. Some analysts have questioned whether the deal would be approved because of P&G's increasing stake in the hair-care business.

        The issue of regulatory approval became an obstacle in the negotiations, an exec utive said. P&G made some arrangements with Bristol-Myers Squibb to help guarantee the approval of the transaction, the executive added, including the possibility of disposing of certain brands to placate regulators.

        If P&G wins control of Clairol, which generated $1.89 billion in sales last year, it would be a stunning upset for Kao Corp. of Japan, the owner of the Jergens line of personal-care products. Kao was expected to win the auction, but its $4.5 billion bid was beaten over the weekend by P&G, which raised its offer on Saturday, the executives said.

        P&G's chief executive, A.G. Lafley, has spoken about his interest in the hair-care and hair-coloring business because of its growth and because innovations — with premium prices — can be introduced relatively quickly.


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