Gillette Acquires Duracell In Deal Worth $7.1 Billion

Gillette took another shelf at the checkout line Thursday, adding the biggest name in disposable batteries to its best-selling razors with the $7.1 billion purchase of Duracell.

The deal would give Gillette Co. yet another well-known product to sell through its worldwide distribution network, while offering Duracell International Inc. a chance to grow in markets where Gillette already has strong clout.

“At the checkout counters there’s going to be nobody who can touch the magnitude of what we’ll be able to do,” said Alfred M. Zeien, Gillette’s chairman and chief executive.

Duracell, the world’s largest producer of alkaline batteries, sells its goods in supermarkets, drug stores and other places where Gillette sells Sensor and Good News razors, Right Guard deodorants, Oral-B toothbrushes and Paper Mate pens.

Zeien said Gillette had been looking to acquire a major new consumer line for the past five years. It identified Duracell as the best potential partner last fall, and the first contact came in January.

The deal is expected to be completed by year-end, if shareholders approve. Zeien said it has the support of investor Warren Buffett, whose Berkshire Hathaway is Gillette’s largest single shareholder with 11 percent of its stock.

Kohlberg Kravis Roberts & Co., the buyout firm that bought Duracell in 1988 and still owns 34 percent, said it also would vote for the deal. KKR stands to be a big winner in the transaction.

One aspect of the deal is cost savings. Gillette said it expects $80 million to $120 million in annual savings beginning fully in 1999. In the two earlier years, savings will be growing to that level.

Zeien said there would be some additional job reductions, mostly through attrition. He did not say how many jobs will be lost.

To cover restructuring costs, Gillette will set aside $275 million in the fourth quarter and $55 million when the deal closes.

The two companies noted Gillette’s strong international reach will also add to the transaction. Duracell has a relatively low market share in some countries where Gillette operates an extensive sales network. The merger will allow it to increase Duracell’s international clout.