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P&G Said Preparing Offer for Beiersdorf

BERLIN — Procter & Gamble is reportedly getting ready to make a bid for Beiersdorf, the German consumer goods group best known for its Nivea brand.<br><br>Reports appearing in the German financial press Monday said P&G has already informed...

BERLIN — Procter & Gamble is reportedly getting ready to make a bid for Beiersdorf, the German consumer goods group best known for its Nivea brand.

This story first appeared in the September 24, 2002 issue of WWD.  Subscribe Today.

Reports appearing in the German financial press Monday said P&G has already informed Beiersdorf’s majority shareholder, the Munich-based financial services conglomerate Allianz, of its interest in taking over Allianz’s 43.6 percent stake in Beiersdorf. Allianz would not comment on the reports, nor would Beiersdorf. Reached in Cincinnati, Ohio, a spokeswoman at P&G declined comment, citing a policy against discussing speculation.

This is not the first time a takeover of Beiersdorf was reportedly imminent. Rumors of a change in majority ownership have been rampant for more than 18 months. In May, L’Oréal was supposedly a highly publicized bidder with a $13 billion offer that never materialized. All dollar figures are calculated from the euro at current exchange rates.

Johnson & Johnson’s name has also been linked with Beiersdorf, but analysts and industry sources have long suggested that Tchibo, the German coffee company and diversified retailer that already holds a 30 percent stake in Beiersdorf, is the prime contender.

Under German takeover law, P&G or any other outside company would be required to make a bid for all of Beiersdorf’s 84 million shares, not just Allianz’s 43.6 percent stake. At Beiersdorf’s current trading price of $96.50, that would carry a price tag of about $8.1 billion.

As an existing shareholder, Tchibo would not be required to make a full bid, although it has always indicated its interest in upping its Beiersdorf holding. The key question for P&G or any other interested party, on the other hand, would be Tchibo’s willingness to part with its 30 percent. The company would not comment, but insiders said Tchibo is not prepared to make a deal, having a $4.9 billion war chest of its own to invest after having sold its tobacco holding Reemstma. And, as one industry source commented, “If Tchibo isn’t willing to give up its share, I don’t think P&G or L’Oréal would accept the presence of a second large shareholder.”

The possible L’Oréal deal would have run into trouble with the German antitrust commission, according to analysts, as it would have given L’Oréal control of the mass skin care market, but they noted that the P&G takeover would not raise similar antitrust concerns.

Allianz has come under financial pressure, in large part because of its takeover of the poorly performing Dresdner Bank, and in six months, its stock price has tumbled about 35 percent. Sources close to Beiersdorf suggest that Allianz is again trying to raise the asking price for its stake, which at current Beiersdorf trading prices would come to about $3.6 billion. “But they could already have sold in the spring, so I think it’s just a speculation game,” he said. Earlier this year, analysts said Allianz was pushing for a sales price of up to $143 to $166 a share.

The recent rumor sent Beiersdorf shares up 18.67 percent late Monday to $96.53. The uncertainty surrounding the company has taken its toll on the stock, which has lost about 40 percent of its value since February. The 52-week high was $141.12.

In addition to Nivea, Beiersdorf owns the Juvena and La Prairie beauty brands and Eucerine skin care.

Nivea, a dominant brand in Europe, is less fully developed in the U.S. despite its widespread distribution. During the last few months, Nivea has begun executing plans intended to boost Nivea to a “leadership” position in the U.S. skin care market. Efforts have included the introduction of a men’s skin care line, a three-item facial cleansing collection and the replacement of its popular Nivea Q10 antiage cream with Q10 Plus. Nivea Q10 had rocketed to the top of the antiage chart when introduced in 1999. Additionally, Nivea has been expanding its consumer education programs.

P&G chairman and chief executive A.G. Lafley has said P&G would focus on health and beauty care categories for growth. In 2001, P&G bought Clairol from Bristol Myers for $4.9 billion, its largest acquisition ever.