P&G; Seeking to Acquire Clairol

Procter & Gamble Co. is close to buying Bristol-Myers Squibb Co.’s Clairol unit for $4.95 billion, the biggest acquisition in its 164-year history, people familiar with the companies’ negotiations said.

The maker of Pantene and Head & Shoulders hair products this weekend sweetened its offer for Clairol from more than $4 billion to add the fast-growing hair-color business to its line of shampoos, the people familiar with the talks said. Procter & Gamble’s bid topped one made by Tokyo-based Kao Corp., they said.

Clairol is the No. 2 U.S. maker of hair color in the $1.55-billion market, which is growing twice as fast as household goods. Procter & Gamble can slash Clairol’s costs by using its own manufacturing systems, analysts said. Chief Executive A.G. Lafley has been trying for almost a year to find products to revive sales and P&G;’s stock, which has dropped 43% since January 2000.

“Clairol is really a global powerhouse,” said Marvin Roffman, president of Roffman Miller Associates, which has more than 2% of the firm’s $135 million under management in Procter & Gamble shares. “It helps their growth a lot.”

Shares of Procter & Gamble rose 33 cents to $67.48 on the New York Stock Exchange on Friday. They have fallen since January 2000 after investor confidence was shaken by the company’s failed effort to acquire American Home Products Corp. and Warner-Lambert Co. for $140 billion in stock. Pfizer Inc. eventually bought Warner-Lambert.

The largest U.S. household-products maker’s stock also was hurt after former Chairman Durk Jager repeatedly lowered profit forecasts because of rising costs and less-than-expected sales.

On Sunday, the Wall Street Journal reported that the companies may announce a purchase as early as today.