The Hindu Business Line : Gillette hits 52-week high on P&G hopes

THE Gillette India stock has started moving up, with the market attributing the move to expectations that Proctor & Gamble, US, which had recently announced the acquisition of Gillette worldwide, has inched closer to the conclusion of the deal.

The stock on Monday scaled a new 52-week high at Rs 849 before closing at Rs 777.60 on the NSE - a move that logged in a total traded quantity of 66,000 shares.

P&G had, in early 2005, stated that it has signed a deal to acquire Gillette, a transaction that was valued at about $57 billion. While there is no clarity as to how exactly the deal will pan out in this country, Gillette India has claimed that things should start falling in place later this year.

According to Mr Saroj Poddar, Chairman of Gillette India, P&G is being seen as a reputable entity that will factor in the well-being of Gillette's shareholders. "We will comply with everything that is required under the Indian legislation," he maintained, adding that Gillette investors will concurrently expect P&G to advance the process of value-addition that has been initiated by their company.

Gillette, in which the current promoter holding is 88 per cent, has recently acknowledged that the impact of the deal, if any, will be known in due course. As things stand, the proposed global integration will be subject to Government approval as well as the consent of shareholders of both companies in the US.

With 88 per cent held by the promoters, P&G may well make an open offer to acquire the remaining 12 per cent of Gillette's equity, a research report by broking house K.R. Choksey has observed. If this happens, P&G will acquire 100 per cent of Gillette stock, which will trigger SEBI's de-listing guidelines.

P&G may, therefore, proceed with a reverse book-building exercise.

The Gillette counter is being watched by those who are tracking the FMCG space, sources said, adding that a number of professional investment outfits have already started scaling up their holdings. The stock, for instance, has found favour from fund houses such as Kotak Mahindra MF, indicated Mr Nilesh Shah, President. For the record, Gillette accounts for nearly four per cent of Kotak MNC Fund's portfolio, the last fact sheet issued by the MF has mentioned.

Gillette, due to the smart new shaving products launched in recent times, may well be chased by such newly proposed funds as Birla MF's GenNext Fund. The latter, as Mr Ravi Sharma, Vice-President, Marketing, at Birla MF puts it, will generally try to invest in companies that benefit from spending by young consumers with high disposable incomes.

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