The Best Deal Gillette Could Get. Gillette case study

Gillette Case Study
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Gillette Case Study
Possible Synergies and Forces Propelling the Merger between P&G and Gillette
The merger between Procter & Gamble and Gillette was borne from the desire to combine the relative synergies and forces so that the new unit would have greater control over the market. One of them is the availability of intangible assets such as both companies’ organization and processes (Tamosiuniene & Duksaite, 2009). Both companies were exceptional in their respective trades, which were primarily consumer products. P&G was popular for commodities such as food, beverages, laundry detergent, shampoo and soap with its brand portfolio extending to about 150. On the other hand, Gillette was known for its razor business. However, it had two other established brands in Duracell batteries and Oral-B toothbrushes that produced a combined $1 billion in annual revenue.
Another synergy would be in their prowess in marketing. Each company has a great appeal to a specific customer segment particularly, when it comes to gender. On one hand, the Gillette was proficient in attracting men to purchase their products. Most of its customers acknowledge the trademark phrase "The Best a Man Can Get." On the other hand, P&G was well versed and honed their skills around marketing to women. Although each of them expanded their products to the other gender, they performed poorly. The resultant merger would help them while negotiating with large retailers such as Target and Wal-Mar as they would have higher control over pricing and product placement in various superstores countrywide.
Justification for the Compensation Given to Jim Kilt
`In the modern contemporary environment, multinational companies have been capable of realizing billions in revenues and astronomical profits. Such a situation compels high compensation packages for senior management. In this case, James Kilt received compensation that was approximately $164 million. In the quest to ascertain whether this is justifiable, an analyst will have to consider the level of change that Kilt has established over the four years he has stayed at the helm. During his stewardship, Kilt orchestrated a stock rise of about 50%, which was equivalent to $20 billion in regard to shareholder value. This valuation is insurmountable and is the result of his ‘slash and earn’ strategical approach that ensured the firm’s stagnant stock price rose. His compensation package is justified considering the relative value that he created. Besides, executives from other companies receive even greater compensation packages. Therefore, even if it came to the ordinary level of thinking, the package is a representation of the market trend. Despite the high compensation package, the shareholders ought to be content with the relative value that Kilts had brought to the company.
Evaluating the P&G Offer
It is right to ascertain that the firm was bought for the right price. This assertion arises when one takes into account different methods of arriving at this position. The discounted cash flow method indicated a valuation at $47.10 from a cash flow perspective while one that took into account the potential cost s...