Chalk up another loss for our business culture today with Procter & Gamble’s acquisition of Gillette. It’s funny how the “traditional business press” covers this sort of thing as if there could be nothing more thrilling. And how every exec treats this as if the world moved this morning, when we’ve all now seen hundreds of megamergers and they never quite end up the “transforming transaction” that everyone hopes.
Buried in each piece today or mentioned in an afterthought on newsradio this morning was the fact that about 6,000 people will lose their jobs because of this “dream deal,” as Warren Buffett described it. But I’m sure they’re happy to be the flotsam in such a monumental step forward for humankind.
You have to read between the lines of analysis too to realize what’s likely now to happen in the marketplace, to other businesses not as big as P&G and to consumers. “Suppliers have been hard-pressed to win leverage in a consolidating retail environment in which massive chains, led by Wal-Mart Stores Inc., exert heavy pricing pressure to compete with each other and woo shoppers” is how the Wall Street Journal put it in the version I read online. But what this really means is that those retailers will have to exert more pressure on anyone without the heft of P&G to make up for what they may not be able to get out of the “new and improved” P&G. And consumers then will be left with less choice as either P&G or other retailers force out suppliers who can’t offer what P&G does. Yippee.
And this may seem frivolous in the face of such larger issues, but Gillette has a great history and a unique culture, and over time, it will get swept into the dustbin. King Gillette, an amazing larger than life character who more than 100 years ago invented the modern safety razor and what could arguably be considered the business model of the modern age (how many businesses operate on a “razor blade” replenishment model?), will fade even further into history.
Yep, it truly is a transforming transaction.