Tuesday, September 10, 2002

P&G willing to pay big for beauty

Next deal may surpass Clairol price

By Cliff Peale cpeale@enquirer.com
The Cincinnati Enquirer

        Buying Clairol might not be enough for Procter & Gamble Co. Less than a year after paying $4.95 billion for the hair-color company, P&G could finance a deal double that size, chairman and chief executive A.G. Lafley told a European newspaper Monday.

        “Given our cash flow, we have between 8 and 10 billion dollars to finance our acquisitions,” he told La Tribune in Paris.

        Priority will go to health-care and beauty-care companies 1/2ndash 3/4 no secret since Mr. Lafley has identified those as growth areas for Cincinnati-based P&G. He previously had said P&G has a list of companies it will consider purchasing if they become available.

        Mr. Lafley's statement is a signal both of how ambitious P&G is and how much cash it generates under his watch.

        During the year ended June 30, the company generated $7.74 billion, nearly $2 billion more than the year before. P&G has said earnings per share will grow by double digits this quarter, and has raised its quarterly earnings forecast each of the last three quarters.

        P&G paid cash for Clairol, its biggest acquisition ever. That added brands including Herbal Essences to P&G's Beauty Care unit, which is among the best performing of P&G's businesses. It has the highest profit margins in the company and sales growth of 13 percent last year.

        During the last two years, P&G has sold off brands including Jif and Crisco, and Mr. Lafley has said there are no other major divestitures planned.

        P&G's stock price closed at $90.85, up 90 cents.


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