Lisa Bernard-Kuhn and Alex Coolidge report:
For decades, bigger has been better at Procter & Gamble.
The maker of Tide, Pampers and other household staples has long boasted the world’s largest portfolio of consumer products. With operations in 41 countries and 126,000 employees, its annual sales of $84 billion are more than double those of its closest competitors.
Some P&G shareholders, though, are growing impatient with a stock price that’s hovered in the low- to mid-$60s for years. Some analysts, too, question whether the company has grown too big for its own good. In the past year, it has twice missed profit projections amid the worldwide economic slowdown.
“It’s fair to say Procter is bogged down, and the sheer size leads people to believe it’s a conglomerate, and conglomerates generally don’t grow all that quickly,” says Connie Maneaty, analyst with BMO Capital Markets.
P&G executives clearly state that a breakup is not in anyone’s best interest. To the contrary, P&G has reaffirmed its business model and is cutting $10 billion in costs.
Still, some analysts are wondering aloud: What if P&G were broken into parts?
Speculation has grown with the arrival of hedge fund manager Bill Ackman, whose Pershing Square Capital Management acquired a $1.8 billion stake in P&G in June. Ackman hasn’t disclosed his intentions but has indicated he will move aggressively to shake things up.
Forcing a breakup would be close to impossible without the board’s consent. Ackman controls less than 1 percent of P&G and would need much stronger backing to press for big changes.
