Organisation: Proctor & Gamble

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Analysis and commentary by Echo Research. This article and further information is at: www.echoResearch.com

Proctor and Gamble (P&G) took the market and the media by surprise last week when it announced its $57 billion dollar acquisition of Gillette. "Another mega-deal eludes the media"(Tom Bawden, Times, 29/1).

The union was widely reported as "a marriage made in heaven"(Bob Macdonald - P&G, Sunday Times, 30/1), and a "dream deal"(Gillette shareholder, Guardian, 29/1). Such enthusiasm might be customary from the involved parties, but the deal was also commended in wider circles. "Good health and perfect timing lead to a beautiful deal"(Jeremy Grant, FT, 29/1). Indeed the limited impact on P&G's share price following the announcement was interpreted as a solid indicator of "positive investor reception"(James Politi, FT, 29/1).

While few doubted that " P&G, even in beefed-up form"(Nils Pratley, Guardian, 29/1) could redress the balance of power between manufacturers and global retailers such as Walmart and Tesco, the same could not be said for its relationship with media agencies. With a huge stable of premium brands and position as the world's largest advertiser, the new P&G would clearly be in an ideal position "to negotiate advantageous deals with media companies"(Economist, 28/1). Put bluntly, "P&G bid set to shake up advertising world"(FT, 29/1).