Merger Mania

Wow, big news today...Came back from school and saw a merger deal completed and an merger in action. I'll start with the one that got finalised first, the Molson-Coors merger and then follow-through with the Gillette/PG merger.

Molson is an important corporation in Canada and I don't see the benefit of such a merger. The beer industry is very brand loyal. I, myself, am a heineken beer drinker, and i don't see myself purchasing any molson or coors product anytime soon. I'd like to check back in three years and see how this merger benefitted the shareholders, I see this evolving into a mediocre merger, two average company merging in hopes of being more competitive in a brand loyal industry.

Now, on to the more interessing topic!

The Gillette and Proctor Gamble merger, now this merger makes a lot more sense to me. Gillette is the number 1 in razor accessories and proctor gamble is number 1 in consumer products, a marriage of the best in their respective industries. I've always liked a good horizontal expansion, now the newly formed company will have products being used in most of the houses in the US (and that's probably an understatement). Those who shave probably use Gillette, those who shower use pantene pro-v or head and shoulders or the other products from P & G. I can't wait to see how this will develop in the future, now it's very important for these two companies to take the process slowly, there's no hurry in the integration process. One can only imagine how ecstatic Warren Buffett is, he will get a share of the most popular razors,toothpaste, shampoo, soap and detergent brand in the US.

Mr. Buffett owns about 33% of berkshire hathaway which in part owns 10% of gillette. And at the end of the merger, he would be receiving 93million shares of the new company, he likes whole numbers so he'll buy stocks until he gets 100million shares of the new company that would have about 2.5 billion shares. Which would be about 4% of a company that will have revenues of 60 billion dollars a year.