Post Merger Scenario of Gillette

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BATAVIA, Ohio (AdAge.com) -- Just over five years ago on a Monday morning in late January, Procter & Gamble Co. shocked the business world with a $57 billion acquisition of Gillette Co., reshaping itself and its industry. Though P&G was already beating most of its competitors handily on the top line and in market share, Chairman-CEO A.G. Lafley predicted that Gillette would add another full percentage point to the company's annual sales growth. Gillette Chairman-CEO Jim Kilts predicted the integration of what he called the two best companies in consumer products would become the stuff of Harvard Business School case studies as P&G reaped the benefits of "reverse synergies" from Gillette managers and practices and Gillette tapped P&G's beauty-care expertise. And he was holding plans for Gillette's first new razor system in seven years -- Fusion -- in his back pocket. | HOW THE STOCK HAS FARED: Stock performance between the day before P&G announced acquisition of Gillette on Jan. 28, 2005 and market close on Feb. 11, 2010. | Five years later, though, things haven't exactly gone as planned. Most of the acquired Gillette businesses have been a drag on P&G's top line, not a boost. Most of Gillette's senior managers (with the notable exception of current P&G Vice Chairman Ed Shirley) have left. P&G's stock has lagged behind key competitors', including Colgate-Palmolive Co. and Unilever, which have beaten P&G 4 to 1 and 3 to 1, respectively, in the stock market. The recession buffeted Gillette's core business -- pricey razors and blades -- and efforts to expand the Gillette and Venus brands into adjacent categories have had mixed results, at best. But P&G executives and some former Gillette managers say much of the deal's value is like an iceberg -- it's there, just obscured under water. Gillette, they say, has transformed

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