P&G;, Noxell: a good business marriage


For a decade and a half, George L. Bunting Jr. called the shots at Noxell Corp. But since the family-controlled beauty products manufacturer was sold to marketing giant Procter & Gamble, Mr. Bunting has had to adjust to a new protocol.

"Before, people had to revolve around my calendar -- now there are other calendars that have to be checked," he said. Though he still holds the title of chairman, Mr. Bunting is no longer in control.

Mr. Bunting now shares responsibility for Noxell with P&G; manager John A. Saxton, Noxell's new president and chief operating officer. Mr. Saxton, 41, who joined P&G; straight from college, moved to Hunt Valley from P&G;'s hometown, Cincinnati, six months ago. Together, Mr. Bunting and Mr. Saxton report to a chain of command three managerial layers deep in Cincinnati.

But Mr. Bunting is not complaining, and no wonder. The Noxell stock he swapped for P&G; shares in the $1.3 billion merger are worth more than $42 million, a leap of almost $10 million in value since the deal was announced in September 1989. Mr. Bunting and the rest of Noxell's shareholders received 0.272 shares of P&G; stock for each share of Noxell stock they owned when the deal closed in December 1989.

Lured by the promise of cash and other resources to expand the Cover Girl, Clarion and Noxzema brands, Mr. Bunting saw linking up with Procter & Gamble as a sure-fire way to secure more shelf space for Noxell's products in the United States and overseas.

In planning the merger, "the focus was on research and development, international [expansion] and continuing to be able to invest in the domestic business," Mr.Bunting said. Procter had the strength to be able to do that."

In its last year as an independent company, Noxell earned $51 million on revenues of $522 million. P&G;, which had net income of $24 billion last year, spent $693 million on research and development alone.

Cover Girl, Noxell's market-leading makeup brand, is already benefiting from P&G;'s clout. With P&G;'s strength in the nation's drugstores and supermarkets, Cover Girl is commanding more shelf space than before the merger. P&G; won't say just how much new space, but Diane Temple, a cosmetics-industry analyst at Salomon Bros. in New York, estimates that the brand has increased its sales as much as 10 percent in the year since the acquisition. That compares with 6 percent growth among Cover Girl's competitors, Ms. Temple says.

Noxell's expertise in cosmetics made it a good fit with P&G;'s strategy of building its strength in the beauty-care market, Mr. Saxton says. That strategy began six years ago with the acquisition of Richardson-Vicks Inc., the P&G; subsidiary that makes Oil of Olay.

"Noxell very nicely makes us one of the large players" in the cosmetics business, Mr. Saxton says.

Much to Mr. Bunting's delight and true to its slow-to-make-changes reputation, Procter & Gamble has not tinkered much with its newest purchase.

"To be frank, Procter doesn't really know anything about the [cosmetics] business," said Kidder Peabody analyst Jay H. Freedman. P&G; has spent the 13 months since the merger "making sure the assimilation goes smoothly and that Noxell fits in," he says.

Since the merger, Noxell has launched its first women's fragrance, Navy, and restyled the ad campaign for Cover Girl. The company also sold Caliente Chili Inc., its Austin, Texas, Mexican food subsidiary, which never really took off.

Noxell's pre-acquisition business plans included both of those moves.

Further, Noxell can go about its business without the pressures felt by a publicly held enterprise, Mr. Bunting says.

"I don't have to worry about the quarterly numbers and feeling the various pressures from the analysts," he says. "We can focus on the business . . . so that's a plus."

Noxell has held its Hunt Valley work force steady at or slightly above the 1,400 before the merger. For those workers, perhaps the most profound influence from P&G; is in the variety of new employee training programs and classes. Where employees used to arrange their own additional work training and education through outside instruction, they now have entire catalogs full of courses available to P&G;'s more than 80,000 employees worldwide.

"They are bringing a lot of good training programs to Noxell," says Marilyn D. Bushnell, who was Noxell's manager of employee relations until November.

P&G; has good programs for training its managers in managing affirmative action and working with a diversified work force, she says.

Classes in such things as time management and marketing and finance for non-financial managers are now offered to Noxell employees, says Jim Schwartz, director of public relations.

Noxell employees also have begun taking P&G;'s "total quality" courses, a company-wide program designed to help employees focus on serving customers and consumers better. Before the acquisition, "Noxell was more focused on simply getting the job done," Mr. Schwartz says.

"The P&G; merger has provided us access to tools that may have been well into Noxell's future," he says.

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