Colgate PalmoliveWith a continuous expansion in it’s product line, Colgate-Palmolive istaking on the look of one of the most stable stocks on the exchange. Colgatehas a wide variety of products sold around the globe including, ColgateToothpastes, Speed Stick Deodorants, Ajax Surface Cleaner, and Hill’s ScienceDiet foods for house pets.Colgate was founded in 1806 in New York City on Dutch Street by WilliamColgate as a starch, soap and candle business. Colgate produced soaps andperfumes or the next 67 years and then in 1873, they introduced their firsttoothpastes, which were aromatic toothpastes.
Then 13 years later, theyintroduced the first dental creme packaged in collapsible tubes similar to thoseused today. After 104 years of being in business on Dutch Street, the largesttenancy on record in New York City the entire Colgate organization moved toJersey City. In 1928 Colgate made its greatest merger of all time with thePalmolive-Peet Company and in 1953 took on its present name of Colgate-Palmolive.By 1967 Colgate-Palmolive was on a roll with sales passing the 1 billion dollarmark. In the years after, Colgate began acquiring major companies and expandingits product line with the purchases of Hill’s Pet Products in 1976, the MennenCompany in 1992 and in 1993 acquired the liquid soap brands of S.C.
Johnson.Before the purchase of Mennen Co. in 1992, Colgate Palmolive had no majorpresence in the deodorant industry.
With the purchase of Mennen Co. they held16% of the deodorant market but had to compete with Proctor and Gamble, who held26% of the market with products such as Sure, Secret and Old Spice.After the purchase of Mennen Co., which was easily purchased without resistfor $670 million in cash, Colgate-Palmolive held 16% of the deodorant marketwith their Speed Stick and Lady Speed Stick deodorants, which are now theleading in world wide sales of deodorants.
They also now own products under theBaby Magic name such Skin Bracer and Baby Magic Foot.Powder.In 1976 , Colgate-Palmolive acquired Hills Pet Products Inc.
Since thefoundation of this company in 1948, they have committed themselves to the healthand welfare of dogs and cats. Today, Hill’s Pet Nutrition Inc. is one of theleading pet food manufactures and is revolutionizing the pet food industry withits Prescription Diet products used by veterinarians to manage such conditionsas obesity, heart disease, kidney disease and many others. Hill’s Pet Productsalso manufacture Hill’s Science Diet food.Hill’s Pet Products has not always been a success. When it was founded in1948 by Mark Morris it grew very slowly in it’s specialty foods and attempted toenter into other areas of pet care such as flea baths and aquarium supplies.
Itwas taken over a number of times but it seemed to be more of a loss rather thangain. In 1976 Colgate-Palmolive acquired it, attracted by it’s Science Dietbrand. Colgate revolutionized Hills Pet Nutrition by marketing not throughsupermarkets but through veterinarians and through pet food stores as thePrescription Diet product line.
Since Hills Pet Nutrition was acquired theyhave had an increase in annual sales from $40 million to $832 million and nowmake up 11% of Colgate sales.After the takeover of Mennen Co. the price of Colgate-Palmolive Co. rosefrom 49.13, the 1991 high, to 60.63, the 1992 high.
Their sales also increasedby 947 million from 6060 million in 1991 to 7007 million in 1992. The net incomealso increased drastically from $125 million to $477 million. And lastly, thetakeover increased the number employed by Colgate-Palmolive from 24,900 to28,800.Through mergers and divestitures Colgate-Palmolive has grown from a smallshop on dutch street to a major stock on the NYSE.
Mergers and divestitures areeconomically wise because they allow for the larger more dependable companies totake another company’s products and turn them on the right path, such as HillsPet Products Inc. The government should not be allowed to regulate them becausemergers allow for a more dependable product. Mergers and divestitures helpcompetition between major companies and also bring more money in for theinvestor through dividends. Although this may cause unemployment, it does helpthe economy.Bibliography:Financial World-June 20,1995 p 58 “Top Dog-How Hills Pet Nutrition became oneof the all-time stars in the Colgate stable” Colgate-Palmolive viaInternet Money Online via Internet Chicago Tribune-Feb.