By Cliff Peale
The Cincinnati Enquirer

In a bold effort to increase its business in beauty salons around the world, Procter & Gamble Co. will pay up to $5.7 billion for the German hair-care giant Wella AG.

P&G unveiled its biggest-ever acquisition Tuesday after weeks of speculation. It will buy 78 percent of Wella's voting stock for $3.6 billion, then tender an offer for the rest of the voting shares and a class of preferred shares.

Add $1.2 billion in Wella debt, and P&G will spend close to $7 billion on the deal.

It will get Wella's sales to beauty salons, No. 2 worldwide to L'Oreal and almost half of Wella's total sales of $3.56 billion. After the deal, P&G will be the world's biggest hair-care company with about $7 billion in sales.

There is little overlap between the companies, since P&G just entered the professional business in 2001 and Wella sells most of its retail shampoos, styling products, coloring products and fragrances outside North America.

"P&G can certainly afford it," said Dan Popowics, equity analyst at Fifth Third Bank, which manages about 10 million P&G shares.

Talks started several months ago, but accelerated recently as the family that controls Wella came around to the idea of selling, said P&G vice chairman Bruce Byrnes.

Shareholders apparently liked the deal, sending P&G's share price up $1.12 to $86.62.

E-mail cpeale@enquirer.com