07.24.12
It will never happen, but that’s not stopping analysts and business press from hypothesizing what form Procter & Gamble might take if the board of directors decides to split up the businesses in an effort to "unlock its value." All the speculation comes after Bill Ackman, the founder and chief executive officer of Pershing Square Capital, acquired a 1% stake in P&G. Ackman has a history for shaking up companies once he takes a position in them.
According to one Wall Street observer, a similar shakeup could lead to P&G looking like this:
1.Beauty & Grooming Company. It would include brands such as CoverGirl, Fusion, Head & Shoulders, Old Spice, Tampax, Always, Crest, Gillette, Herbal Essences, Nice 'n Easy, Oral B, Scope, Pantene, Venus, Braun, Clairol, Olay, Secret and Vidal Sassoon.
2. Household Care Company. It would include brands such as Ace, Bounty, Febreeze, Luvs, Puffs, Cascade, Duracell, Gain, Mr. Clean, Swiffer, Charmin, Dawn, Era, Pampers, Tide, Bounce and Downy.
As for the rest of P&G and its billion-dollar brands, the scenario would include selling the Iams pet food segment, which P&G acquired in 1999 and is now one of the top three pet food companies in the world. One suitor could be Nestle, which owns Purina.
P&G’s OTC drugs business would also be up for grabs. The unit, which includes brands like Prilosec, Vicks, Pepto Bismol, and Metamucil, could attract interest from private equity, major drug companies, and smaller OTC companies like Prestige Brands, according to observers.
Selling off brands that don't fit for one reason or another is a concept that isn’t completely foreign to P&G executives. After all, the company sold Pringles for $2.7 billion earlier this year, noting that the snack food unit was no longer part of P&G's strategic plans. And going way, way back, P&G acquired Clorox in 1957. But by 1969, the Feds forced P&G to sell the bleach maker, citing antitrust issues.
Of course, the question that begs to be asked is, value for whom? The dealmakers? What about consumers? After all, championship teams are built on several key players, not just one. Consider LeBron James didn’t win a single championship until he was teamed up with Chris Bosh and Dwayne Wade. Now, FMCG isn’t the NBA, but the point is, every winning team has role players. And that’s true whether you’re running a pet food business or running a pick-and-roll.