Gillete Acquisition

Gillette’s Energy Drain: The Acquisition of Duracell
Strategic Management 04-75-498 Fall 2009

In this case, we aim to show the analysis and reasons for Duracell abysmal performance after its acquisition by Gillette. Furthermore, we hope to show a new strategy that could initiate a turn-around for Duracell under Gillette.

5th November 2009

General Size-up

After a somewhat long period of stagnant performance in which their stock price has seen a decrease of 45 percent, as mentioned in the case, Gillette found themselves in need of some drastic changes in order to recover, and return to being the growing success that they have been in the past, prior to their acquisition of Duracell. Gillette had seen earnings growing at 17 percent annually for 6 years prior to 2000.In 2001,a year that totaled more than $9.2 billion dollars in revenue Gillette’s Mach3 and the woman’s Sensor razors were the top two shaving systems in the United States. In an attempt to grow further and dramatically boost revenues Gillette aimed at acquiring another industry giant Duracell. Many expected that through shared distribution channels and marketing efforts the two companies would resourcefully complement one another substantially. To the surprise of many, although being successful on their own, these two companies found it difficult to develop the   synergies that they had   anticipated, and since have been experiencing increasing financial turmoil in terms of decreasing revenues and operating margins. Given these circumstances, Gillette’s CEO James Kilt has been given two weeks to come up with a strategy and implementation that will rectify the solution .Options including continuing with the status quo, divesting or restructuring the battery department completely.

Issues
Since the acquisition, Duracell has not shown the potential that it had prior to 1996. Although Duracell has been maintaining market share, their revenues and operating margin are no longer growing, and in...