Merger Plan Of Johnson & Johnson

Brand merger strategy
---- Johnson & Johnson merges Pampers
Background introduction of merger strategy
Johnson & Johnson is an American multinational medical devices corporation, pharmaceutical and consumer packaged goods manufacturer. J&J plans to merge Pampers for maximize the current market value of equity of the firm.

In the analysis of necessity, weconclude it into four aspects.
1. Strategy: J&J has launched a strategic growth plan these years, for occupying the most baby care market.
2. Industry Value Chain: J&J is excellent in baby care industry, however paper diaper has never been expanded before. So if J&J wants to be the number one, it must stretch its product chain.
3. Market share: if J&J merges Pamper, to somedegree, the market share of baby care industry will largely increase. Then more products of J&J will be purchased by the loyal consumer.
4. Profit: Pamper performs well in make value, so it will help J&J to raise the earnings per share (EPS).

Well, in the analysis of possibility, we divide it into four aspects.
1. Finance: J&J has a well-functioning cash flow, which cansupport the merger behavior.
2. Merger Experience: J&J has successfully merged many famous brands, like Neutrogena, so the process of merging will be in control of J&J.
3. Manage System: J&J has abundant experience of managing brands. And J&J enjoy much similarities with P&G, so the merger will be easy than between other companies.
4. Law: According to the AmericanAntitrust Law, J&J is impossible to merge a company like P&G, for both of them are the top 1 or 2 in the certain industry. However, if J&J just merge Pamper from P&G, the law cannot be the barrier.
By Suiran Liu 10348068

Merger power assessment (from J&J aspect)
J&J strength analysis
J&J have well-development professional baby brand. There are many baby-care productslike baby lotions for different use, baby oils, baby creamy, baby powder, baby cologne, etc, but only lack the baby paper diaper. So we think if we buy Pampers, which will make this baby brand more perfect and powerful.
J&J is a professional company majoring in medical study with long history. people can have confidence in its technical standard in this area, which can make up P&G’srelatively weakness in this research area for they are facing a serious problem with this pampers that cause skin irritability .

Weakness analysis
From year of 2005, especially in 2010, JNJ’s products were found quality problem and have large-scale recall products, which have adverse image within consumers. The assets power ,by looking up from the NYSE , the statistics not only the revenue or netprofit, P&G both be superior to J&J, so this maybe the biggest dilemma to buy the Pampers.
| J&J | P&G |
Revenue | 82.559billion | 65.030billion |
Net profit | 11.797billion | 9.672billion |
Profit rate | 14.2892% | 14.8731% |
Accrued assets | 21.970billion | 54.316billion |
Accrued | 27.293billion | 22.811million |
From the aspect of product form as a complete set,P&G may be not willing to sell this main brand, though presently it faces some problems. Whilst it has other product have similar produce technology that may be the main obstacle which may increase P&G’s cost.
ByYalin Xiang10346026

Merger power assessment (from P&G aspect)
Pampers origin
40 years ago, Mr. Millar, the manager of P&G’s development department, greeted with hisnewborn granddaughter with great excitement. But he was soon tired with the frequency of changing diapers. So he came up with the idea to invent a disposable but comfortable baby diaper. That’s how Pampers was born.

Pamper strength analysis
Pampers is the first invented disposable baby diaper which has great water absorption and comfortable feeling, and this make it world famous. Pampers is...