Procter & Gamble (Research) is already the nation's largest consumer products company, making everything from Pampers to Tide, from Crest toothpaste to Head & Shoulders shampoo. Products from Gillette (Research) include not only its signature razors but also Duracell batteries and Braun and Oral-B brands dental care products.
"This merger is going to create the greatest consumer products company in the world," said billionaire investor Warren Buffett, whose Berkshire Hathaway (Research) is Gillette's largest shareholder with 96 million shares, or about 9 percent of the company.
"It's a dream deal," Buffett said, adding that he would increase his holdings so that he would end up with 100 million shares of P&G by the time the deal closes. (The deal gives Buffett a one-day profit, on paper, of roughly $645 million and a whopping $4.4 billion profit overall. For more, click here).
The deal would give the company even more control over shelf space at the nation's retailers and grocers, real estate that is at a premium.
"Shelf space is diamond-encrusted gold. It's exposure to the consumer and everyone wants exposure to the consumer," said retail analyst Kurt Barnard. "They each had a lot of economic power before, but with the marriage they'll have a lot more power, power to get shelf space, preferred positions, all of that."
That increased power for the largest player in the U.S. industry is also seen as putting pressure on smaller rivals to eye deals of their own.
While P&G and Gillette officials didn't specifically address what other deals this one could spur, Gillette CEO Jim Kilts said he does expect further consolidation in the consumer products industry.
"I believe the consumer product industry needs to consolidate," he told a ...