Procter & Gamble Co (NYSE:PG) is one of the top consumer products companies. The well-known firm has built a portfolio of familiar brands that can likely be found in most households. Some of those products have come via acquisitions, including a large one made in 2005.
The Gillette Acquisition: On Jan. 30, 2005, Procter & Gamble announced it was acquiring razor and shaving company, Gillette, in an all-stock deal.
Procter & Gamble agreed to pay 0.975 shares of PG for each Gillette share owned, valuing the deal at $54 billion at the time of the announcement.
The acquisition made Procter & Gamble the largest consumer products company in the world with annual revenue of $60 billion, passing Unilever N.V. (NYSE:UL) with $53 billion.
Berkshire Hathaway Inc (NYSE: BRK-A)(NYSE: BRK-B) was the largest Gillette shareholder at the time of the acquisition. Berkshire CEO Warren Buffett praised the move calling it “a dream deal” and highlighted the move to make P&G the world’s largest consumer products company.
Buffett later traded his PG shares for ownership in Duracell, the battery company once owned by Procter & Gamble.
Related Link: This Day In Market History: Gillette Buys Duracell
Investing $1,000 In PG: The move to make Procter & Gamble the largest consumer products company acted as a catalyst and could have been one investors followed along with.
Investing $1,000 in PG shares on Jan. 31, 2005, would have been able to purchase 18.34 shares of PG. Those 18.34 shares of PG are now worth $2,579.52 today, based on a share price of $140.65.
The return of 10% annually from the purchase does not include dividends. PG has paid out an annual yield of around 2% to 3%, adding to the 16-year return.
Photo: Courtesy of P&G
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