FOR IMMEDIATE RELEASE
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PROCTER & GAMBLE ACQUIRES CONTROLLING INTEREST IN WELLA
WILL NOW MAKE TENDER OFFER FOR REMAINING SHARES
CINCINNATI, USA and DARMSTADT, Germany - March 18, 2003 - The Procter &
Gamble Company (NYSE: PG) today said that it has signed an agreement to purchase
a controlling interest from the majority shareholders of Wella AG (FSE: WAD)
headquartered in Darmstadt, Germany. The cash purchase of (euro)3.2 billion
gives P&G 77.6% of Wella's voting shares.
P&G also announced today that it intends to make a tender offer for the
remaining voting and preference shares of Wella. P&G will offer a cash price of
(euro)92.25 per share for the voting shares, and (euro)61.50 per share for the
preference shares, valuing the total shares at (euro)5.4 billion. P&G may,
however, offer Wella's preference shareholders the option of accepting P&G
shares as an alternative to the cash offer.
This deal is subject to normal regulatory review and government
approvals in various markets including the European Union and the U.S.
"Wella is a leading beauty and hair care company with strong brands,
excellent management and an organization with deep expertise in the beauty
business," said A.G. Lafley, chairman of the board, president and chief
executive of P&G. "This acquisition is a great strategic fit given P&G's
leadership and proven strength in its core hair care business. The deal further
expands P&G's beauty businesses across Eastern and Western Europe, and in Latin
America."
"P&G and Wella are in highly complementary businesses," said Lafley.
"Wella's strength in professional hair care complements P&G's strength in retail
hair care. Wella's strength in color and styling, complements P&G's strength in
shampoo and conditioners. Wella's strength in Europe complements P&G's strength
in North America. By bringing these complementary businesses together, we create
significant opportunities for top and bottom line growth in hair care."
"The P&G and Wella combination is also highly synergistic," said
Lafley. "With global geographic scale, we expect to generate significant
efficiencies."
This acquisition is expected to contribute about (euro)3.4 billion in
sales to P&G's overall beauty business - approximately (euro)1.6 billion in the
professional hair care segment; (euro)1.0 billion in the retail hair care
segment; and (euro)800 million in fragrances.
WELLA ACQUISITION IS ON STRATEGY FOR P&G
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o The deal is in line with P&G's strategy to strengthen its core
businesses and focus on higher-growth, higher-margin businesses.
Wella's professional business has averaged double-digit sales growth
over the last three years - well ahead of the annual industry growth of
about 5 percent.
o The deal is expected to help drive innovation across P&G's entire hair
care portfolio.
o The timing is right for this acquisition as P&G's overall business, and
particularly its hair care business, are both strong with solid
fundamentals in place.
P&G AND WELLA ARE HIGHLY COMPLEMENTARY
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o Professional salon hair care sales are $10 billion globally. Wella
estimates it has a 22 percent global share -- the number two position
in the world. P&G, through its Clairol(R) brands, has a relatively
small professional presence in North America.
o The global retail hair care market is a $34 billion industry. P&G has
annual sales of more than $4.5 billion with leading brands such as
Pantene(R), Head & Shoulders(R) and Herbal Essences(R). Wella is
complementary to P&G from both a geographic and category perspective.
o The size of the global fine fragrance market is approximately $20
billion. Wella's and P&G's combined sales in fragrances are more than
$1.0 billion. Wella markets several brands that are, or have the
potential to become, classics such as Gucci(R), Rochas(R), Escada(R)
and Montblanc(R). These fragrances, marketed to females, complement
P&G's male-oriented fragrances like Lacoste(R) and Hugo Boss(R) (the
leading male fine fragrance in the world).
THE DEAL OFFERS P&G SIGNIFICANT OPPORTUNITY FOR SYNERGY
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Synergies to be gained from the combination of P&G and Wella are
projected to be at least (euro)300 million by the third year. P&G said it
expects to keep Wella's professional salon business largely intact.
THE PURCHASE
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In addition to the equity offer of (euro)5.4 billion for Wella, P&G
will assume net debt of (euro)1.1 billion, bringing the total enterprise value
to (euro)6.5 billion. With Wella's annual sales of (euro)3.4 billion for the
2002 calendar year, the total enterprise value of (euro)6.5 billion is roughly
1.9 times sales, after taking the year-three synergies into account, a 10-times
projected EBIT multiple.
The purchase is expected to have a neutral earnings effect in year one.
Going forward, P&G expects the purchase to be slightly accretive to earnings per
share in year two, and solidly accretive in year three.
ABOUT WELLA
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Founded in 1880, Wella is a leading beauty care company selling its
products in more than 150 countries. The company's three divisions include
professional hair care, retail hair care, and cosmetics and fragrances. Some of
its well-known brands include Wella(R), Koleston(R), Sebastian(R), Graham
Webb(R) and High Hair(R) professional hair care lines; Wellaflex(R),
ShockWaves(R), Ultra Sheen(R), and Vivality(R) consumer retail hair care
products; Gucci(R), Rochas(R), Escada(R) and Montblanc(R) fragrances. For more
information, please visit the website at WWW.WELLA.COM.
ABOUT P&G
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P&G markets a range of well-known beauty and health care brands
including: Pantene(R), Head & Shoulders(R), Olay(R), Clairol Nice`n Easy(R),
Herbal Essences(R), Cover Girl(R), Max Factor(R), Noxzema(R), Old Spice(R), Hugo
Boss(R), Crest(R), Vicks(R), Actonel(R), PUR(R) and more. P&G employs nearly
102,000 people in more than 80 countries. For more information please visit the
website at WWW.PG.COM.
ANALYST/INVESTOR MEETING
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P&G will host an analyst/investor meeting on Tuesday, March 18, 2003 at
7 a.m. (EST) at the Palace Hotel in New York to discuss the Wella purchase. For
those unable to participate in person, a conference call of the meeting will be
available by calling 800-946-0742 in the U.S. For calls outside the U.S., the
number is 719-457-2650. Please use the following confirmation code 177504 to get
access to the conference.
A re-play of the call will be available until midnight, Tuesday, March
25, 2003 by calling 800-289-0579 in the U.S. The confirmation code is 177504.
Outside the U.S., please call 719-457-2550 and use the same confirmation code.
The meeting will be webcast on HTTP://WWW.PG.COM/INVESTOR.
ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN
THIS NEWS RELEASE, ARE FORWARD-LOOKING STATEMENTS, AS THAT TERM IS DEFINED IN
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. IN ADDITION TO THE RISKS
AND UNCERTAINTIES NOTED IN THIS NEWS RELEASE, THERE ARE CERTAIN FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED BY SOME
OF THE STATEMENTS MADE. THESE INCLUDE: (1) THE ACHIEVEMENT OF EXPECTED COST AND
TAX SAVINGS ASSOCIATED WITH CHANGES IN THE COMPANY'S ORGANIZATION STRUCTURE; (2)
THE ABILITY TO ACHIEVE BUSINESS PLANS, INCLUDING GROWING VOLUME PROFITABLY,
DESPITE HIGH LEVELS OF COMPETITIVE ACTIVITY, ESPECIALLY WITH RESPECT TO THE
PRODUCT CATEGORIES AND GEOGRAPHICAL MARKETS IN WHICH THE COMPANY HAS CHOSEN TO
FOCUS; (3) THE ABILITY TO MANAGE AND MAINTAIN KEY CUSTOMER RELATIONSHIPS; (4)
THE ACHIEVEMENT OF GROWTH IN SIGNIFICANT DEVELOPING MARKETS SUCH AS CHINA,
TURKEY, MEXICO, THE SOUTHERN CONE OF LATIN AMERICA, THE COUNTRIES OF CENTRAL AND
EASTERN EUROPE AND THE COUNTRIES OF SOUTHEAST ASIA; (5) THE ABILITY TO
SUCCESSFULLY MANAGE REGULATORY, TAX AND LEGAL MATTERS, INCLUDING RESOLUTION OF
PENDING MATTERS WITHIN CURRENT ESTIMATES; (6) THE ABILITY TO SUCCESSFULLY
IMPLEMENT, ACHIEVE AND SUSTAIN COST IMPROVEMENT PLANS IN MANUFACTURING AND
OVERHEAD AREAS; (7) THE ABILITY TO SUCCESSFULLY MANAGE CURRENCY (INCLUDING
CURRENCY ISSUES IN LATIN AMERICA), INTEREST RATE AND CERTAIN COMMODITY COST
EXPOSURES; (8) THE ABILITY TO MANAGE THE CONTINUED POLITICAL AND/OR ECONOMIC
UNCERTAINTY IN LATIN AMERICA (INCLUDING VENEZUELA) AND THE MIDDLE EAST, AS WELL
AS ANY POLITICAL AND/OR ECONOMIC UNCERTAINTY DUE TO TERRORIST ACTIVITIES OR WAR
(INCLUDING KOREA); AND (9) THE SUCCESSFUL ACQUISITION, TRANSITION, INTEGRATION,
AND OPERATION OF THE WELLA BUSINESS. IF THE COMPANY'S ASSUMPTIONS AND ESTIMATES
ARE INCORRECT OR DO NOT COME TO FRUITION, OR IF THE COMPANY DOES NOT ACHIEVE ALL
OF THESE KEY FACTORS, THEN THE COMPANY'S ACTUAL RESULTS MIGHT DIFFER MATERIALLY
FROM THE FORWARD-LOOKING STATEMENTS MADE HEREIN. FOR ADDITIONAL INFORMATION
CONCERNING FACTORS THAT COULD CAUSE ACTUAL RESULTS TO MATERIALLY DIFFER FROM
THOSE PROJECTED HEREIN, PLEASE REFER TO OUR MOST RECENT 10-K, 10-Q AND 8-K
REPORTS.
# # #
MEDIA RELATIONS CONTACTS:
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P&G Corporate Media Center in the U.S.: 1.866.PROCTER or 1.866.776.2837
P&G Corporate Contact for Europe: Andrew Fisk, 32.2.456.2327
P&G Corporate Contact in Germany: Detlef Schermer, 49.6196.89.4369 or
49.6196.89.4577
P&G INVESTOR RELATIONS CONTACT:
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John Goodwin, 513-983-2414