One aspect which Comm101 didn’t really explore was the effects or mergers or takeovers. I wanted to give an example of two giant companies. I’m going to talk about P&G buying Gillette.

P&G paid a huge amount of money to buy Gillette. 54 billion dollars to be precise. The reasons for Gillette could be many but the most evident ones, keeping in mind that this was a friendly transition, will be discussed here.

The acquisition of Gillette by P&G may be due to reasons such as ‘shelf space’. As Susan Egan, Managing Director of Egan-Jones Rating Co., said at the time of the acquisition, ‘The fight for shelf space is ongoing, it’s one of the main things that a large consumer product company like Gillette is looking at, and a combination with Procter & Gamble makes a lot of sense,” Egan said. “It’ll enable both Gillette and Procter & Gamble to get better shelf space and to distribute their products more cheaply.”

Due to the friendly nature of this great acquisition, Gillette’s former CEO became chairman of Cincinnati-based P&G, joining its board. Warren Buffet, owned the largest number of shares in Gillette and was extremely happy about the deal and dubbed it a ‘dream deal’.

Statistics said, that this acquisition would catapult P&G’s annual sales to more than 60 Billion dollars. Such acquisitions, mergers and takeovers may help to reduce fierceness of  competition, get rid of the price and shelf wars and accumulate resources to become a consolidated better firm and may even help to expand. However, when mergers and takeovers fail, the results are colossal. The Damien-Chrysler failure is a reminder. Therefore, such steps should be taken with much caution and research.