P&G captures Wella in £4.5bn deal

Procter & Gamble, the US consumer goods giant, clinched a deal to acquire Wella yesterday, snatching the German hair care company from under the nose of rival Henkel.

P&G, which makes Pantene shampoo and owns the Clairol hair colour range, secured Wella by persuading the four different branches of the founding Ströher family to sell their stake. The secretive family controls 78 per cent of Wella's voting rights and previously had been reluctant to sell up.

The deal, which is worth €6.6bn (£4.5bn) including debt, will pit P&G head-to-head with L'Oreal of France in the battle for global supremacy in the fast-growing hair care sector. It brings P&G hair care brands such as Shock Waves, Vivality and Wellaflex, as well as the Gucci, Rochas and Escada range of fragrances.

Wella's management board, which was caught by surprise by P&G's announcement, described the family's decision to sell up as an unnecessary step from a business perspective. In a tersely worded statement, it said it was "convinced" the company would continue to demonstrate "strong growth" were it to remain independent.

P&G has agreed to pay the Ströher family €3.2bn in cash for its 77.6 per cent stake. It has launched a tender offer for the outstanding shares, valuing the total equity at €5.4bn. The deal, which concludes several months of negotiations, is subject to regulatory approval and is expected to take four to six months to complete.

Alan Lafley, P&G's chairman and chief executive, said Wella's strength in professional hair care would complement its strength in retail hair care through its Clairol range. He is anticipating savings of €300m by the end of the third year. Wella had sales of €3.4bn last year.

Analysts said P&G's move ruled out the prospect of a bidding war from rivals such as Henkel and Unilever because the agreement with the Ströher family was binding. The deal is a setback for Henkel, which has sold off its chemicals businesses to focus on cosmetics. The German company, which shares ownership of the Persil washing powder brand with Unilever, made an informal approach to Wella last autumn but it was rejected as too low.