P&G COLORS ITS HAIR CARE PORTFOLIO WITH CLAIROL BUY

Mark Hamstra

CINCINNATI -- Procter & Gamble here said last week that it would buy the Clairol hair care business from Bristol-Myers Squibb, New York, for about $4.95 billion in cash, giving P&G a major presence in the fast-growing hair-coloring category.

In a conference for analysts and media in New York, P&G president and chief executive Alan "A.G." Lafley said the consumer-products giant would leverage its extensive hair care expertise to grow the Clairol family of brands, which had sales of $1.6 billion last year. Clairol, whose lines include Nice 'n Easy, Natural Instincts, Miss Clairol, Hydrience, Herbal Essences, Aussie and Infusium, is the No. 2 maker of hair colorants in U.S. sales behind L'Oreal. "This gives us a hair care brand positioned where P&G currently does not compete," Lafley said.

About 45% of Clairol's sales in 2000 were coloring products, with the rest being shampoo and conditioner. Some analysts suggested that the Federal Trade Commission might force P&G to shed some of its shampoo and conditioner brands because the acquisition would boost its market share to more than 40 percent in hair care, according to some reports. P&G's hair care brands include Pantene, Pert, Head & Shoulders and Vidal Sassoon. The colorant business is completely new to P&G, however, other than a small-scale test the company has under way in the United Kingdom with its Vidal Sassoon brand.

Lafley also said P&G would boost its marketing for Clairol.