P&G and Beiersdorf – A potential match made in heaven?

By Andrew MCDOUGALL contact

- Last updated on GMT

P&G and Beiersdorf – A potential match made in heaven?

Related tags: Stock, Stock market

Could it be third time lucky? Rumours are flying around that consumer goods giants Procter & Gamble and Beiersdorf could be ready to strike a deal, having flirted before; despite the rumours being denied, we take a look at why the deal could make sense were it to happen.

Neither company was available for comment, saying it was not policy to talk about rumour or speculation, and a Reuter’s source has also dismissed the talks; despite a Beiersdorf share increase prompting market speculation that one of the shareholders, Maxingvest, was willing to sell to the US rival.

"We are not talking with anyone, we last spoke with P&G in 2003 and there's nothing in the rumour," ​the Reuter’s source said.

Potentially a good move…

However, despite the denial, one cannot help but feel it could make good sense if a deal was to be made, given P&G’s recent performance in Beauty & Grooming, contrasted with the successes that the Nivea skin care maker has experienced.

Earlier this year, even though the group posted positive results, P&G’s Beauty & Grooming category dropped behind its competitors​ leading to many analysts suggesting the Ohio-based firm should consider divesting the beauty business and focus on its other areas.

On the other hand, Beiersdorf saw its profits rise once again​, helped by the continued success of its Nivea brand; one which P&G has singled out as ‘impressive’ in the past.

Beiersdorf would certainly complement P&G in the skin care category too, as it has a strong focus on developing on key markets such as Brazil and China, and according to Euromonitor, market share in Eastern Europe skin care would increase almost ten-fold if a deal was to be struck.

The speculation has aided the Germany-based manufacturer too, as Beiersdorf share price remains high as the rumours circulate.

There’s history…

It is not the first time a deal like this has been spoken of, and P&G has never hidden the fact that it finds Beiersdorf an ‘interesting’ company.

Back in 2010, a similar thing happened as Beiersdorf share prices roseafter P&G CEO (at the time) Robert McDonald was quoted in a press report saying that Beiersdorf’s Nivea is a “terrific global brand… ​[Speaking of a possible acquisition] the price and contract would have to be right.”

Again, analysts at the time spoke positively of a deal, with Deutsche Bank AG's William Schmitz saying that P&G should pursue Beiersdorf as it will add a good international brand to its portfolio.

"If he could do one deal, I think Beiersdorf would be No. 1 on his list,"​ he commented.

The story goes back further though, as P&G made an attempt to acquire the Hamburg-based cosmetics firm back in 2002; but lost out to family holding company Tchibo.

P&G was in talks with insurance group Allianz over its 43.6 per cent holding, which would have meant P&G would then have to make an offer for the entire stock under German law, but an agreement could not be reached. 

Related topics: Business & Financial

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