CINCINNATI — After strong shows of shareholder support on Tuesday, Procter & Gamble Co. and Gillette Co. now face regulatory hurdles as they prepare to blend their giant consumer products operations.
Shareholders of both companies overwhelmingly approved P&G's acquisition of Gillette that would form the world's largest consumer products company, with such brands as P&G's Pampers and Gillette's line of razors. In announcements at separate special meetings, the companies said 96 percent of the shares that were voted favored the merger.
The European Commission has a Friday deadline to approve the merger or begin an in-depth probe into antitrust issues, and Federal Trade Commission approval also is needed.
A.G. Lafley, P&G's chairman, president and chief executive, told shareholders in P&G's hometown that regulatory talks seem to be going well.
"We are still on track to close this merger in fall 2005," Lafley said.
Among the prominent consumer brands that would be joined are P&G's Tide detergent and Crest toothpaste and Gillette's Duracell batteries and Braun electric shavers. It would be the largest acquisition in P&G's 167-year history.
The companies have reportedly indicated they could sell parts of their oral-care businesses in response to competitive concerns, but Lafley said it was premature to speculate on details.
While Massachusetts Secretary of State William Galvin has questioned whether P&G is paying enough for Boston-based Gillette — the deal was announced in January at $57 billion — Gillette CEO James Kilts said Tuesday: "The combined company is going to be a company that is going to grow and prosper."
Lafley said that extended global reach and the increased efficiency of the combination would help P&G have "more consistent and stronger consumer and shareholder value over the long term."
Greg Luttrell, large cap growth portfolio manager for the New York-based pension fund TIAA-CREF, which holds stock in both companies, said the pair have similar cultures and have made strides in recent years positioning themselves for the future.
"We're long-term investors, and from that perspective, the deal makes a lot of strategic sense," Luttrell said. He said as the two large companies are blended, "it will be a gradual progression. You'll see continued improvements."
William Bradley, a retired Cincinnati paint company executive who said he's owned P&G stock since the 1950s, agreed that the combination will lead to more stock value.
"I think it's a great blend of two great companies," he said.
Under the deal, Gillette shareholders would receive 0.975 shares of P&G common stock for each share of Gillette common stock.
P&G shares rose 4 cents to $53.94 on the New York Stock Exchange on Tuesday, while Gillette shares gained 7 cents to $51.70. P&G shares have ranged between $50.33 and $57.40 in the past year, while Gillette shares have traded between $37.77 and $54.33.