European Union antitrust regulators approved Procter & Gamble Co.'s proposed $57 billion takeover of Gillette Co. on Friday, after P&G agreed to shed its battery toothbrush business.
The EU approval brings Cincinnati-based P&G one step closer to creating the world's biggest consumer products company, with brands such as Pampers and Gillette's line of razors, but it still needs regulatory approval from the U.S. Federal Trade Commission to complete the deal. FTC spokesman Mitchell Katz declined to release details of the pending review. P&G hopes to complete the deal in the fall.
The European Commission said its investigation showed the only major overlap in Europe between the two companies was in the market for battery toothbrushes. Gillette's Oral B brand had a 43.8 percent share of the European market last year, according to Euromonitor. P&G's SpinBrush had 6.7 percent of the European market.
"Procter & Gamble committed to divest its entire SpinBrush toothbrushes business and to grant a license for the co-brands used on these toothbrushes," the Commission said.
A.G. Lafley, P&G chairman, president and chief executive, welcomed the news. "The EU clearance is a significant milestone as we work to combine two of the world's leading companies to benefit consumers, customers and shareholders," he said in a statement.
SpinBrush sales totaled $150 million last year; sales of all P&G products totaled some $51 billion.
EU regulators investigated the merger carefully to see if it would cause anticompetitive "conglomerate effects" because of the large number of brands the new company would control. It was concerned that retailers would be compelled to choose P&G brands over rivals.
"The market investigation has, however, shown that even after the transaction the parties would not be in a position to impose conditions on retailers to the detriment of the customer," they said.
EU Competition Commissioner Neelie Kroes said she was satisfied the merger would not harm customers. "When two major consumer product companies merge, we have to ensure that European consumers do not suffer in terms of price competition or product ranges," she said.
Shareholders of both companies on Tuesday overwhelmingly backed the merger, with 96 percent of shares voted being in favor.
The new company will be home to a host of well-known household brands, from P&G's Tide detergent and Crest toothpaste to Gillette's Duracell batteries and Braun electric shavers. It would be the largest acquisition in P&G's 167-year history.
