The paper "Assessment of the Action of Gillette Company by Proctor and Gamble" is a perfect example of a business assignment. The case study is an in-depth assessment of the action of Gillette Company by Proctor and Gamble for a reported $57 billion dollars. It delves into the negative and positive issues that were raised because of the merger. It explores the reason as to why the merger was successful compared to the fail Gillette takeover bid attempts of the 1980s. It examines the driving forces and synergies that propelled the companies to merge.
It then evaluates the compensation package paid to Mr. Kilts the Gillette’ s CEO. In addition, it examines the valuation of the deal together with its payment method. It goes on to discuss the conflicts of interest that the investment bankers that acted as the transacting advisers in the merger and at the same time were the same entities that prepared the fairness option. Finally, it outlines the concerns raised by the regulators and politicians with regard to the merger. Question one In the 1980s, Gillette successfully defended itself from several hostile takeover bids.
A hostile takeover is a situation where a company is acquired or purchased against the consent or will of its board of directors. The process occurs when an individual or an institution purchases the shares of a company with a price, which is higher than that of the market, or with a bonus. Revlon Group Chairman Ronald O. Perelman who owed 13.8% of the company orchestrated the first takeover attempt by trying to buy out the rest of the shares at a higher price than that of the market.
After negotiations between the boards of the two companies, an agreement was reached, that Gillette would buy its own shares at a premium rate and a bonus payment. In return for the bonus payment, Revlon signed an agreement not to buy Gillette shares for ten years. The other famous attempt was that of Coniston. In a heated proxy, battle Coniston, which had a small stake in the company-attempted buy out Gillette by trying to win four seats on its board of directors.
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