Bidding process for P&G brands in full swing, insiders say

By Simon Pitman

- Last updated on GMT

Bidding process for P&G brands in full swing, insiders say

Related tags Procter & gamble

Procter & Gamble has got the sale of a large number of its smaller or less profitable brands well under way, according to individuals who are involved with the business.

Sale documents have been sent out to potential bidders which have been linked to the Wella hair care brand, a number of smaller cosmetics brands and its fragrance business, a Bloomberg report stated, citing anonymous individuals with links to the sale.

Brands to be sold off individually or combined?

Procter & Gamble has previously stated that the brands may be sold off individually or combined and could raise as much as $19 billion; important revenues for the company which is currently struggling after over-expanding with a resulting disparate portfolio of brands.

The report states that all of the company’s biggest multinational competitors have been contacted with respect to the bidding process, including names such as Henkel, Revlon, Kao, Coty and Unilever.

Experts have tipped that a number of European home and personal care businesses could be in the front running to buy up the P&G brands, with analyst Jeff Stent of Exane stating in a client note written on April 8th​ that he believes Henkel and Unilever will likely be at the top of the list.

Selling lesser brands to focus on the biggies

The aim of its brand restructuring exercise is to sell off some lesser known and lower revenue-generating product lines in an attempt to focus on key beauty brands and further develop them.

At this point the company insiders say that there are still many details to finalize, including what brands will be sold off, while the deal many not even take place, the report states.

The report goes on to say that a number of fragrance, make-up and hair salon beauty brands are likely to be top of the list as potential divestitures.

The company is also looking into the sale of its Wella hair care business, the report cites.

Will celebrities or fashion brands get the boot?

Currently the P&G beauty and personal care brand portfolio includes 34 principle brands, including celebrity names such as Christina Aguilera Fragrances and Naomi Campbell, and fashion brands such as Hugo Boss and Lacoste Fragrances.

Besides Wella, big hair care brands include Head & Shoulders, Nice ‘n Easy, Vidal Sassoon and Herbal Essences.

But its two biggest brands, and the ones P&G is tipped to hang on to for further development, are the Pantene hair care range and Olay skin care.

Outlook is tough

For its most recent second quarter, the company reported net sales down by 4% to $20.2bn, a figure that was impacted by currency translations and a 1% fall in organic sales for its hair, beauty and personal care division – the only one of its four divisions to see a decline.

The company said that the decline was mainly driven by a fall in sales in the Prestige and Skin and Personal Care categories, as demand for products such as Olay dropped.

Looking ahead to full year 2015 sales, the company is predicting that revenues will fall by 5%, while net earnings will decline by 12%.

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