Byline: Andrea M. Grossman

Procter & Gamble landed the biggest acquisition in the company’s 164-year history with the purchase of Clairol on Nov. 16. The deal, estimated at $4.95 billion, brings P&G into the hair color arena and adds $1.6 billion in hair care sales to P&G’s $3.2 billion hair-care division.
P&G expects the deal to pull down earnings for the current fiscal year by 2 cents a share, but anticipates “improved performance on the balance of the business” to offset this impact. The deal is expected to be accretive to earnings for fiscal 2003.
Robert S. Matteucci, vice president of hair color and professional business for P&G, said in a recent interview that the two organizations should be combined by the first quarter of 2002. Clairol employs 4,000 employees worldwide, with headquarters in Stamford, Conn. The company’s biggest hurdle will be maintaining Clairol’s expertise in the hair color and professional sectors, both areas in which P&G has no prior experience. “We are not in the business and have no deep understanding of them,” Matteucci said.
Streamlining P&G’s hair care portfolio will also be on P&G’s agenda. In addition to hair color brands Nice ‘n’ Easy and Hydrience, the acquisition of Clairol brought many shampoo brands to P&G, including Herbal Essences (which entered hair color early this year), Renewal 5X, Aussie and Infusium. The Vidal Sassoon brand, one that P&G acquired in 1985, has been struggling over the past year since its overpriced relaunch in fall 2000 failed. Herbal Essences, on the other hand, is a $700 million brand worldwide.

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