Marvelous Merger Still Complicated

The company that makes your toothpaste decides to merge with the company that makes your razor blades. At a minimum, all the products you need to make yourself pretty or handsome (or pretty handsome) will now be managed under the same roof.

Presumably, the merger of Procter & Gamble (PG Quote) and Gillette (G Quote) is based on larger, more traditional monetary assumptions, but from my bathroom, it looks like a good deal.

With mergers, comes change, however. And while the bigwigs at the two companies work out the corporate kinks, Gillette shareholders will need to take care of their portfolios.

Presuming the whole thing is approved by the Federal Trade Commission, P&G shareholders won't have much to worry about. The deal, valued around $57 billion, was announced back on Jan. 28 and, minus some new product pictures in the annual report, P&G shareholders won't see any change in their shares, except for the some serious dilution (which we'll get to in a minute).

Gillette shareholders, on the other hand, will no longer see the big "G" on their brokerage statements.

Before we get to the technicalities, the first question you have to ask yourself is: Do I even want P&G shares?

To Stay or Go

Let's face it, not all mergers are good ones. (That's probably why 50% of all marriages end in divorce.) The AOL-Time Warner deal is the prime example of a merger disaster, but only the most obvious one.

So it's up to you to do some due diligence on this deal. Pull up P&G's annual report and read it. You'll be able to get a feel for the company if you read the opening text in the front of the report. The "letter from the president" and "management's discussion and analysis" will tell you where the company sees itself. Then decide if you see yourself with them. I think the synergies are there in the product lines as well as the internal cultures -- both firms support entrepreneurship and have a deep understanding of local markets -- but it's not my money.