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Henkel Bids For P&Gs Haircare Business

On April 2015, Henkel & Co KGaA AG, Headquarters in Germany, is active in both consumer and industrial sector bids to buy hair care business of Procter & Gamble. The bids bring P&G one step closer to his cost-cutting strategy. The company offer for includes the Clairol and Wella brands of P&G's hair care business, and could fetch a valuation of USD 7 billion to USD 5 billion. While Henkel is considered to be the most preferred buyer, but private equity firm such as Co LP & KKR also submitted a bid for the same business area. The auction for the assets is confidential. Representatives for P&G and KKR, declined to comment. According to the P&G's CEO, Lafley who in 2014 has said he would converse the P&G's Cincinnati-based strategy of hostile expansion and shed more than 50% of its brands. P&G has already sold some of its brands. In 2014, the company sold its some of its soap brands and Duracell battery brand to Unilever Plc and Berkshire Hathaway Inc respectively.

Analyst View:
This bid would benefit both the companies. As P&G would be able to divest is two huge brands Clairol and Wella which will add surplus to its cost cutting strategy. On the other hand Henkel with this acquisition would be able to align its product portfolio. Henkel with this bid can also enhances its customer’s base and can reach to its growth targets.

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