There's a rare burst of meaningful news today from consumer products giant Procter & Gamble
Earnings outlook: "Core earnings per share," which exclude restructuring charges, are now expected to increase by 13% to 14% from the same period last year. Prior guidance called for an 11% to 13% jump. The company credits strong volume growth, especially in its health-care unit, and favorable exchange rates.
Wella acquisition: P&G bought out the family shareholders who controlled 77.6% of the voting stock for about $3.6 billion in cash. In addition, it will make a tender offer for the rest of the shares, bringing the total value of the deal to $5.7 billion. The price represents a 22% premium to Wella's market value as of close yesterday.
P&G CEO A.G. Lafley calls the acquisition "a great strategic fit." Though no chief executive would ever call it anything but that, it seems the Wella line does fit in "wella" with the company's Clairol hair-care division (which was purchased from Bristol-Myers Squibb
This deal is one example of how a $110 billion company maintains strong growth prospects. Wella has grown sales two to three times the industry average over the past few years, and is the world's No. 2 player behind L'Oreal.
In an interview with a French newspaper several months ago, Lafley said he expects acquisitions to account for about one-quarter of the company's long-term sales growth. "We are," he said, "still a relatively small player in these fast-growing businesses."