Nimble and componentized Proctor & Gamble has apparently tendered an offer to buy Gillette for a mind-boggling $57 billion dollars in stock that’s been accepted. Done deal. But I’m still trying to wrap my brain around this figure, trying to get a handle on just how big $57 billion dollars really is, and thought you’d enjoy coming on the ride…
First off, Gillette has five main business units: Blades and Razors, Duracell, Oral Care, Braun and Personal Care. If we just divide ’em up evenly, we’re talking about roughly $11 billion for the Duracell bunny? I mean, I knew it was profitable to give away the razor and sell the blade, but, wow!
So let’s look at it another way. Gillette has approx. 29,400 employees. Again, assuming they’re all of equal worth, that means that the purchase price puts a value of $1.9 million per person. D’ya think they’ll even see 1% of that as a transition bonus?
Gillette sells to five major geographic areas: North America (40% of sales), Latin America (10% of sales), Europe (33% of sales), Asia Pacific (10%), Africa, Middle East & Eastern Europe (7%). Multiply those out and we can ask whether Gillette’s Asia Pacific market presence and sales are really worth $5.7 billion? Or is the Africa, the Middle East and Eastern European operation worth $3.9 billion?
Here’s a different way to look at it: according to the Census Bureau, there are approximately 6.42 billion people on the planet today. If we all got together and decided to match P&G’s bid for Gillette, we’d each have to ante up $8.87. Rather have it be domestically owned? There are 295.3 million people in the United States. Each would be required to put up $193.02. Just incidentally, if we just all bought $193.02 worth of Duracell D-cell 8 packs from Walmart.com, we’d each have 193 batteries. Without shipping, of course.
Another tact: if we compare the acquisition to the GDP of different nations (source), we’ll find that Gillette is worth a bit less than Romania ($60.3 billion GDP, 2003) and a bit more than Bangladesh ($51.8 billion GDP). Also on the “cheaper than Gillette” list, and possibly a more interesting investment anyway: Morocco, Vietnam, Ecuador, Luxembourg, Costa Rica, Iceland, Trinidad and Tobago, Jamaica and Nepal. In fact, let’s make it a package deal of Caribbean islands: The Bahamas + Honduras + Jamaica + Trinidad & Tobago + Costa Rica together have a GDP of only $47.5 billion. Heck, P&G could buy ’em all and still have enough change to give each of its 110,000 employees a nice $86,364 bonus. (which, yes, would buy a lot of razor blades).
Isn’t this fun?
Let’s look at weight. 490 dollar bills = 1 pound, so if P&G paid for Gillette in $20 dollar bills, it’d weigh in at 5,816,326 pounds, or 2,908 tons. Yeah, they’re paying in stock, I know, but still, that’s a lot of bills! I’ll skip calculating how many sleek black leather briefcases would be required to hold this much money, but I’m sure it’s quite a few… I will point out that a Boeing 747 jet aircraft only weighs 400 tons (without peanuts), so we’re talking about the equivalent of 7.2 747’s in $20s.
One last calculation, perhaps the most telling. If you earned the minimum wage, you’d be getting $5.15/hour before taxes. How long would you have to work before you could afford to compete with P&G on the acquisition of Gillette? Hmmm…. $57 billion / $5.15 = 11,067,961,165 hours. With no breaks. That’s 276 million weeks, 5.3 million years, or 532,113 decades. If we assume a typical lifespan of 60 years, we’re talking 8,868 generations, assuming you start working the moment you’re born, don’t take any time off and tag team your descendant on your death bed, handing over the keys to the fry-room. Oh, and don’t actually spend any money while you’re working and don’t face any sort of inflation.
Maybe, just maybe, it’s easier to let Proctor & Gamble help turn Gillette around after all. Maybe I’ll just buy a few bars of Zest, a bottle of Old Spice, a Swiffer, and a can of Pringles and call it a day.