business news in context, analysis with attitude

The Boston Globe reports that Massachusetts Secretary of State William F. Galvin believes that Gillette may be worth as much as $72 billion, far more than the $57 billion that Procter & Gamble agreed to pay for the company earlier this year.

In addition, Galvin is saying that a study he commissioned suggested that the combination of the two companies ought to be able to realize far greater synergies than they have proposed – as much as $28 billion, compared to between $14 billion and $16 million – which would mean that Gillette ought to be worth more to P&G than it is actually paying.

The Globe writes, “Galvin also said the new numbers raise further questions about the motives of Gillette chairman and chief executive James M. Kilts, whom he said received an ‘unusual’ $11 million payment from P&G as part of a total compensation package that an executive compensation firm has said could be worth $173 million.”

The Globe also is reporting that the US Federal Trade Commission (FTC) has requested additional information in connection with its review of P&G’s acquisition of Gillette.

Both companies are cooperating with the FTC, though they maintain the terms of their deal are entirely appropriate.
KC's View:
The sad reality, created by the travails at Enron and WorldCom, is that many people assume that CEOs are more interested in their own bank accounts than those of their investors and employees. Like it or not, in the court of public opinion, that may be the standard of proof that Gillette and Kilts may have to meet – that this was the best possible deal for everyone, not just for Kilts and P&G.