P&G spends $7bn on Wella acquisition

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Procter & Gamble is to acquire German hair products and fragrances firm Wella after a surprise decision by the family owners to sell its majority stake in the company

The ?6.5bn ($7bn) deal means P&G will control one of the largest fragrance portfolios in travel-retail, adding over 20 brands including Gucci, Rochas and Alfred Dunhill to its own range, which includes prestige brands Hugo Boss, Jean Patou and Giorgio Beverly Hills.

The acquisition will give P&G's presence in Europe a considerable boost, as well as in Latin America and Japan, where its brands are less well known. And analysts are predicting that the US firm's global distribution platform will significantly improve Wella's operating margins.

Wella announced preliminary sales of $3.56bn last year, up from $2.82bn in 2001. P&G chairman, president and ceo A G Lafley said: "P&G and Wella are in highly complementary businesses, and Wella's strength in Europe complements P&G's strength in North America.

"By bringing these complementary businesses together, we create significant opportunities for top and bottom line growth. The P&G and Wella combination is also highly synergistic. With global geographic scale, we expect to generate significant efficiencies,"