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P&G Buys China Joint Venture for $1.8 Billion

May 12, 2004

Procter & Gamble Co. bought the remaining 20% stake of its China joint venture for $1.8 billion, securing its foothold in one of the world's fastest growing economies. The purchase accelerated P&G's plan to take over the venture from partner Hutchison Whampoa China Ltd. In a statement, P&G said results from its China business give it confidence that it has the right people, the right business strategies and the in-depth understanding of local consumers and retailers to go it alone.

P&G has built factories and established distribution lines in China, and already has the top-selling brands in shampoos and conditioners, facial moisturizers and baby care products. Its laundry detergents, toothpaste and feminine care products occupy the No. 2 positions in the Chinese market as well.

When the joint venture was established in 1988, P&G had a 69% stake, which it expanded to 80% in a 1997 restructuring of the deal. The agreement contained provisions allowing it to buy the rest of the stake in 2007.

The only cost to the cash-rich Cincinnati, OH-based company would be the minimal interest it would forego to make the purchase. P&G executives expect the deal to close on June 18, but did not specify its financing plans.

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