CINCINNATI — Procter & Gamble Co. is buying Clairol for $4.95 billion in cash in a deal that would add the Clairol, Herbal Essences and Nice 'n Easy brands to its lineup of hair care products like Pantene, Pert and Head & Shoulders.
P&G's shares dropped 3.5 percent in early trading.
The deal announced Monday would be P&G's biggest acquisition ever and comes as the consumer products giant is cutting thousands of jobs and a number of noncore brands in the food business in an effort to boost profits.
Clairol is a world leader in hair coloring and care products with about $1.6 billion in worldwide sales and would give P&G a bigger position in the hair coloring business, which has grown more important as baby boomers turn gray.
It is unclear how many of Clairol's 4,000 jobs worldwide would be eliminated by P&G, which has its own distribution, research and manufacturing capabilities.
But P&G said it expects to save about $200 million in costs from combining the operations.
Procter is buying the Clairol business from Bristol-Myers Squibb Co., which put it up for sale last September so it can focus on its drug business.
"Clairol's brands are known and loved by millions of consumers around the world," A.G. Lafley, president and chief executive of P&G, said in a statement. "Clairol brings P&G into the fast-growing business of hair colorants and positions us for further growth in one of our core business categories: hair care."
In early trading on the New York Stock Exchange, P&G shares were down $2.38 at $65.10 while Bristol-Myers Squibb gained 60 cents to $56.60.
The acquisition is expected to add $900 million in hair care sales and $700 million in hair coloring sales annually to P&G's $7.4 billion beauty care business.
P&G has been test-marketing coloring products through its Vidal Sassoon brand that it developed from its research labs in Britain. But it has been reluctant to introduce an entirely new hair-coloring brand because of the high costs.
Clairol controls 39 percent of the U.S. hair-coloring market, according to market research concern A. C. Nielsen; L'Oreal controls 50 percent.
The global colorant segment alone has generated annual growth in the range of 4 percent to 6 percent over the past five years, about double the growth of shampoo, conditioners and styling aids.
"Clairol has built a really strong business within their hair coloring division and currently 75 percent of their sales are national, but the brands are globally recognized," spokesman Brent Miller said Monday.
The transaction would be subject to approval by regulators. Some analysts have questioned whether the deal will be approved because of P&G's increasingly large stake in the hair-care business.