If you can’t beat ’em, buy ’em!
This appears to be the strategy adopted by Procter & Gamble in an attempt to beef-up its haircare business in Europe.
The globe’s largest advertiser – whose brands include the Clairol haircare range - has redoubled its efforts to acquire Wella, the German-owned rival brand for a sum said to be between $5 billion (€4.64bn; £3.18bn) and $6 billion.
Negotiations with Wella have been held at top level, according to inside sources, although the German firm is said to be “ambivalent” about a deal – or is maybe just playing hard to get.
P&G certainly needs a done deal more than its target. The Cincinnati-headquartered giant must achieve a substantial lift to have any hope of overtaking L’Oreal, the biggest beauty firm in the world.
Wella would also would give P&G a significant presence in hair salons across Europe, a sector in which Clairol is largely absent, procuring “a halo of professionalism in the beauty world,” according to cosmetics consultant Suzanne Grayson.
This is the second time P&G has tilted its cap at a large German company in the hope of boosting its European share of the beauty business. Talks between the US giant and Beiersdorf, owner of the Nivea skincare range, broke down last year after failure to agree on price.
Alan G Lafley, president/ceo of Procter & Gamble, recently told Paris business newspaper Les Echos that acquisitions will contribute at least 1% annually to the firm’s total sales revenues. The P&G strategy is to achieve yearly revenue growth of between 4% to 6% – while it will shoot for underlying profits growth of ten per cent annually.
Data sourced from: The Wall Street Journal Online; additional content by WARC staff