Clairol joins Procter & Gamble lineup

Acquisition completed

S&P cuts credit ratings

November 17, 2001|By BLOOMBERG NEWS

CINCINNATI - Procter & Gamble Co., the largest U.S. household-goods maker, completed its $4.95 billion purchase of the Clairol hair-care business from Bristol-Myers Squibb Co. yesterday. The company's credit ratings were cut by Standard & Poor's.

Procter & Gamble said it will decide how many jobs to eliminate and which factories to close in the next 90 days as it combines operations. Clairol, based in Stamford, Conn., has 4,000 employees.

The acquisition is the largest in Procter & Gamble's 164-year history, adding $1.6 billion in annual sales through brands such as Nice 'n Easy and Miss Clairol hair color and Herbal Essences shampoos. The transaction was financed mostly with debt, adding to Procter & Gamble's $12.6 billion in borrowings as of Sept. 30.

"They have bitten off a big chunk, and cost savings will be important," said Vincent Muscolino, portfolio manager with David L. Babson & Co. "They will generate increased cash flow, and work down the debt."

Standard & Poor's lowered Procter & Gamble's corporate credit and senior unsecured debt ratings to AA- from AA. The outlook is stable, the agency said.

S&P, which had monitored Procter & Gamble since the Clairol purchase announcement in May, said in September that it would cut the ratings. Moody's Investors Service lowered its ratings last month.

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