P&G explores sale of Wella hair care business worth around $7 bn

Procter & Gamble Co (P&G), the world's largest consumer products company, is exploring the sale of its Wella hair care business that could be worth around $7 billion, Reuters today reported, citing sources familiar with the matter.

WellaP&G is working with Goldman Sachs Group to assist in the sale, the report said.

The potential sale comes two weeks after the Cincinnati, Ohio-based company agreed to sell its Duracell battery unit to Warren Buffett's investment firm Berkshire Hathaway in a stock swap deal worth $3 billion. (See: Warren Buffett to buy Duracell from P&G in a stock swap deal worth $3 bn)

After years of expansion into lines like pet food and beauty products, P&G, which also makes Gillette razors, had said in August that it would cut as many as 100 brands from its portfolio to focus on others, like Tide detergent, which has made the company a powerhouse over the decades (P&G to cut 100 underperforming brands, focus on key products).

The move is part of the company's strategy to improve its financial performance by focusing on about 80 brands that generate 95 per cent of the profits and 90 per cent of sales.

P&G had acquired Wella in 2003 from the heirs of founding Ströher family for €6.5 billion ($7.1 billion), including debt of €1.1 billion. The deal was then the biggest acquisition in P&G's history.

P&G, whose brands include Head & Shoulders and Pantene, had also acquired Clairol hair care business from Bristol-Myers Squibb for $4.95 billion in 2001.

Founded in 1880 by Franz Ströher, a hairdresser from Saxony, Eastern Germany, Geneva, Switzerland-based Wella specialises in haircare, styling and colourants, with its products being sold in over 150 countries.

The company has three main divisions: Professional Hair Cosmetics, Consumer Hair Cosmetics, and Cosmetics and Fragrances.

Its Professional unit that sells hair care products to professional hairdressers under the brand names Wella, Sebastian, Graham Webb, Kadus, Londa, Welonda, Belvedere, and Tondeo accounts for nearly 50 per cent of group sales, while the Consumer division, which focuses on hair coloring products along with care and styling products, generates over 30 per cent of total Wella sales and Cosmetics and Fragrances unit accounts for 20 per cent.

Its main competitors are Alberto-Culver Co, Beiersdorf AG, L'Oréal SA, and Johnson & Johnson.

P&G is also said to be exploring the sale of Braun - its electric razors and toothbrushes unit, which it acquired as part of its $57 billion purchase of Gillette in 2005.