Merger & Acquisition

Mergers are identified in history to be beneficial for shareholders in the merging companies, with a larger share going to the shareholders of the company being acquired. Thus, merger and acquisition activities are aimed at increasing shareholder value, which would entice investors to continue investing in the company.

Acquisition of Gillette by P&G suffered some challenges during takeoff, but the deal managed to meet revenue targets within the first year, signifying positive results for shareholder. Most issues that may lead to failure of mergers and acquisitions can be avoided or dealt with to ensure long-term value for the company and the shareholders. Human integration has been a major challenge for merged companies, but examples such as the merger of P&G and Gillette among others has shown that mergers would be successful if well planned and executed.

Based on the deal, P&G has payed 0.975 for each share of Gillette, appreciating the acquisition at a 20% premium to shareholders of Gillette. The shareholders of P&G are worried of the company's share prices being weak. To sidestep such issues, P&G has promised to buy back its shares, worth $18-$22 billions, over the coming 12-18 months. P&G plans to pay Gillette 40% in cash and the rest 60% in stock. By acquiring Gillette, P&G will be adding the world's best shaving products to its portfolio. This is what P&G's CEO reflects that is necessary to overtake their close competitors, particularly in developing countries.

Both the organizations' CEOs designated the deal as an approachable change, and highlighted that it would be beneficial for both organisations correspondingly. Based on analysts, the merging firms had various connections inside the business history. In addition to this, such a merger has been based on a dissimilar model where innovation was the key element rather than scale. It was called an exceptional occasion of acquisition by an innovative firm to expand its product line by acquiring another innovative company. Analysts labelled this specified merger as the "perfect marriage".

However I feel like that in the controlling element of the merger can raised concerns relating to product overlapping between both companies and to be in position to regulate whether the joint firm would have the authority to monetary prices. There were fears that solid connections in toothbrushes and toothpaste could affect the regulators seeking some divestitures, even though the desires of P&G are to retain as numerous Gillette brands as it gets. Yet, according to researchers, the agreement would easily win regulatory approval, as P&G and Gillette mostly sold specified products to specified customers and also the government had realized that preventing US companies from mounting would make them exposed to foreign competition. So it has become easy-going of big mergers. Oppositions, nonetheless, were anticipated to come from European Union antitrust regulators; as such an arrangement would give the merged firm extra power inside the overseas business.

To close with, a question that comes in my mind when it comes to any business is the factor of failure in such agreement as the merger can possibly turn into a destruction case for the mergers as in some cases the intentions has nothing to do with shareholder maximization which is a priority in such a deal but we evidently know that personal interest of high power individuals destroyed many businesses as in nowadays, personal greed is something common. On the other hand, such a concept of merger and acquisition without a doubt elevate the size of the combined firm to a the higher “league” providing bigger scales of management leading to bigger success careers for individuals.