The purchase is expected to have neutral earnings effect in its first year. P&G said it expects slight accretion to earnings per share in year two of the purchase. Wella is projected to be "solidly accretive in year three."
Alan G. Lafley, chairman, president and chief executive officer of P&G, told attendees: "Given the strength and the momentum of P&G’s business, we are well-positioned to integrate Wella and execute with excellence from day one."
The Wella acquisition touches P&G in a number of ways. First and foremost, the deal gives P&G an instant foothold in the growing professional hair care sector, and extends P&G’s strength in the retail hair care market. Overall, the deal adds $2.8 billion in hair care sales to P&G’s $4.5 billion hair care business. In the professional arena within hair care, Wella’s $1.7 billion salon business boosts P&G to a second-place ranking, up from its scant $200 million professional business. Wella’s overall sales last year were $3.5 billion.
Wella’s mass retail business, valued at approximately $1.1 billion in annual sales, adds to P&G’s $4.3 billion mass retail business, solidifying P&G’s lead in the mass retail hair care market. Bruce Byrnes, P&G’s vice president of global hair care, added that Wella’s retail hair colorant business brings P&G into unclaimed territory abroad.
While Wella’s strength in Europe complements P&G’s strength in North America, the acquisition also expands P&G’s beauty businesses across Eastern and Western Europe, as well as in Latin America.
Wella will continue to operate from Darmstaad, Germany, Byrnes said, adding that on the professional end "we will keep the business running the way it is. Then, we will turn our attention to where we have redundancies in administration, manufacturing and operations, retail selling, and other places where we can take the best [of what we have and what they have.]"