Wilkinson Sells Non-European Share of Firm
Gillette Co. said Wednesday that it agreed to buy the Wilkinson razor and blade business outside the 12-country European Community from British-based Wilkinson Sword Group Ltd. for $72 million.
Gillette is also acquiring a 22.9% non-voting stake in a new, still unnamed company, which is likely to be incorporated in the Netherlands. The company is buying the Wilkinson lines in the EC.
Analysts said the EC part of the deal will not add directly to the Gillette bottom line, but will allow the company to get a share of some of the profits.
They also said the EC arrangement ends hopes for its major competitors, including Bic of France, to acquire that market share for themselves.
Brenda Lee Landry, an analyst with Morgan Stanley & Co., said the purchases represent a “great investment” for Gillette, which will add about $6 million a year in operating profits.
“The biggest benefit for Gillette taking part in these transactions is the fact that Bic is not taking part,” said Jay Freedman, an analyst with Kidder, Peabody & Co. “It is relatively small but it eliminates a competitor.”
The American grooming products giant, which already controls about 60% of the world shaving goods market, said it is investing $155 million in equity investment and lending in the deals.
The previous owner of the Wilkinson line, Stora of Sweden and its Swedish-based Match subsidiary, is selling all its disposable lighter, match and razor and blade businesses worldwide to the new company of which Gillette is a part owner in a deal worth about $600 million, Gillette said.
A “significant part” of the transaction was completed Wednesday and the rest is expected in early 1990, Gillette said.
Gillette will pay $14 million for its share in the new company. Also, Gillete agreed to lend the company $69 million.
Wilkinson controls about 2% of the U.S. blade and razor business compared to 63% for Gillette.
Outside the European Community, Wilkinson sales amounted to $30 million in 1988, with substantial market shares in non-EC members, including Austria, Australia, New Zealand, and Brazil. Also, Wilkinson’s manufacturing plants in Brazil and Zimbabwe are included in the sale.
A New York-based bank, J. P. Morgan & Co., owns 24.9% of the equity in the newly formed company and is the lender for all of the nearly $400 million in senior debt needed for the acquisition.
Among the other investors in the Dutch company are Sweden’s SPP Skandia Insurance Co.; Spira Invest AB; Procuritas MBO Invest AB, and Kjobenhavns Handelsbank, a Danish bank.
