P&G Possible Wella Buy Complicated By Henkel’s Purchase Of Stake In Firm
This article was originally published in The Rose Sheet
Executive Summary
A showdown over Wella between Procter & Gamble and Henkel may be developing following the German consu-mer goods manufacturer's announcement March 10 it has acquired a 6.86% stake in the hair care firm
|
A showdown over Wella between Procter & Gamble and Henkel may be developing following the German consu-mer goods manufacturer's announcement March 10 it has acquired a 6.86% stake in the hair care firm. The move by Henkel, which follows reports that P&G was close to striking a deal with Wella valued at $5 bil.-$6 bil., could throw an obstacle in the way of P&G's acquisition attempt. Henkel said in a statement it views the holding "as an interesting investment" given "the current stock market conditions." However, under German takeover law, minority shareholders can block a buyout offer unless the buyer has 95% acceptance. Wella currently is majority-controlled by the Stroeher family, which owns about 78% of the company. If P&G is forced to enter a bidding war for Wella it is unclear how high the firm would be willing to go given its recent $5 bil. acquisition of Clairol. Ownership of Wella, which reported preliminary sales of $3.7 bil. for 2002, would push P&G ahead of L'Oréal in the hair care category and give the Cincinnati-based company a stronghold in the European market. P&G has been looking to enhance its position in Europe through acquisition; the company has reportedly been shopping for Beiersdorf, but interest has waned due to the Nivea -marketer's complicated shareholder structure. Wella's salon hair care brands, such as Wella , Sebastian and Graham Webb, would complement P&G's Clairol Professional brand and provide new distribution opportunities for Clairol in Europe. Under its cosmetics and fragrances arm, Cosmopolitan Cosmetics, Wella also markets prestige fragrance brands like Gucci , Montblanc , Rochas , Anna Sui and Alfred Dunhill . P&G has been expanding its own fine fragrance business, which includes Hugo Boss , through acquisitions like Jean Patou and Lacoste . There may be more on the line for Henkel, which needs an acquisition to sustain long-term growth. The addition of the Wella hair care brands to Henkel's Dep line would position the company as a serious contender in the category. Henkel is said to have made a bid for Wella last year, which was rejected by the Stroeher family as being too low. Henkel generated sales of $10.7 bil. (€1=$1.1) in fiscal 2002, compared to P&G's $40.24 bil. in sales for the fiscal year. |