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Gillette to power Duracell
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September 12, 1996: 9:28 p.m. ET
Company agrees to buy battery maker for $7.1 billion in stock
From Correspondent Sean Callebs
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NEW YORK (CNNfn) - Gillette Co. said Thursday it was buying Duracell International, the world's largest maker of alkaline batteries, for $7.1 billion.
The deal gives Gillette another well-known product to add to its stable of goods. The company had been shopping around for years to expand its product line, which includes razors, Right Guard deodorants and Oral-B products.
For Duracell, the sale gives the battery maker a chance to grow where Gillette has a strong presence.
"Gillette brings to Duracell an infrastructure of enormous global proportions, and Duracell brings to Gillette another leg in its growth stool in a product category that is growing very rapidly and where Duracell is reasonably dominant," said Peter Barry, consumer products analyst for Deutsche Morgan Grenfel.
Wall Street buyout firm Kohlberg, Kravis Roberts & Co. is the largest shareholder of Duracell with 34 percent. It bought the company from Kraft eight years ago for $1.8 billion, or about $5 a share. If approved, the deal gives KKR a paper profit of almost $2 billion.
The American Stock Exchange dampened enthusiasm for the purchase when it said it was looking into the activity of Duracell stock options in the days prior to Thursday's announcement.
Without acknowledging that an investigation is underway, officials showed CNNfn records revealing thousands of call orders that flooded in September 9 and 10 for the right to buy Duracell for $50 a share when the stock was trading at only $45.
Gillette executives said they don't believe word of the deal leaked out.
Nonetheless, Wall Street bid up Duracell shares 18 percent Thursday. Duracell closed up 9 to 58-5/8. Meanwhile, Gillette shares rose 7/8 to 66.
The deal is expected to be approved by year's end. Among Gillette's largest shareholders is investment guru Warren Buffett, who always has a nose for a god deal. Buffett's Berkshire Hathaway owns 11 percent of Gillette and is a board member of the company. Gillette's CEO said Buffet supports the deal. 
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