Breaking Up is Hard to Do

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Procter and Gamble (P&G) has operations in 41 countries and 126,000 employees, with annual sales of $84 billion. While these revenues are double that of its closest competitors, analysts and shareholders are beginning to wonder if the company might see faster growth if it split up.

Questions:
1. What is the current stock price? What was the stock price a year ago?
2. What is P&G doing to make itself more attractive to investors? What is the company’s current PE ratio and how do you interpret it?
3. Bill Ackman acquired a $1.8 billion stake in P&G in June with the intent of forcing a shake up at the company. What percentage control is this?
4. What are the pros and cons of splitting the company? If you were a shareholder of P&G, what position would you support and why?

Source:
Bernard-Kuhn, L. and A. Coolidge. (2012). Is P&G Too Big? Weighing the Pros and Cons of Break-up, USA Today, August 19 (Retrievable online at http://www.usatoday.com/money/industries/story/2012-08-19/procter-gamble-growth/57134630/1)