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Deal week

Business | Proctor & Gamble's $57 billion deal to buy Gillette should give the new company greater clout against mass-market retailers like Wal-Mart, analysts say

Issue: "Iraq: Unity in adversity," Feb. 12, 2005

Headlining business pages across the nation this past week were the mega-mergers of some of the nation's largest companies.

Leading the way was Proctor & Gamble's $57 billion deal to buy Gillette. With combined revenues of more than $60 billion, analysts say the new company would have greater clout against mass-market retailers like Wal-Mart.

Proctor & Gamble, already the nation's largest producer of household products, would add Gillette's Duracell battery, Right Guard deodorant, and line of razors to its collection of more than 300 consumer brands.

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Also announced last week was SBC Communications' $16 billion plan to acquire AT&T. Ironically, San Antonio-based SBC was one of the seven regional providers created by the breakup of AT&T's telephone service monopoly by federal regulators in 1984.

Today, SBC is the nation's second-biggest regional phone company, with about 50 million local-telephone customers. In addition, SBC owns a stake in Cingular Wireless, the nation's largest wireless carrier with more than 49 million subscribers.

The deals follow on the heels of two other deals last month when Johnson & Johnson agreed to buy Guidant Corp. for $25 billion, and cell-phone giant Sprint Corp. agreed to buy Nextel Communications Inc. for $35 billion.

Price pump

The rising fuel costs that burdened U.S. companies and consumers alike throughout much of last year continue to cause consternation in 2005.

With the price of gasoline and utility fuel bills holding steady, the cost of other petroleum-based products is going up. For example, carpet, fertilizer, paint, polyester, and plastic toys have become more expensive to make, wrap, and ship. That's leading companies to charge more for these and other products.

"As long as the economy stays strong and the basic commodities prices stay very high, products made from these commodities are probably going to increase in price," said Bill Jewell, vice president for energy at Houston-based Dow Chemical Co.

But there is a bright side for those who have hedged their bets on the high price at the pumps by purchasing stock in oil producers. In the past few weeks, many of these companies have posted huge year-end revenue gains, sending stock prices higher.

For example, ChevronTexaco recently completed the most profitable year in the company's 125-year history, posting revenue of $155.3 billion, up from $121.3 billion in 2003.

ConocoPhillips also posted more than a $30 billion rise in revenue. The company earned $136.9 billion in 2004 after posting $105.1 billion in revenue a year ago.

Balance Sheet

· Lee Enterprises Inc. will buy Pulitzer Inc.-publisher of the St. Louis Post-Dispatch, the Arizona Daily Star, and a dozen other daily newspapers-in a $1.46 billion deal that Lee said would make it the nation's fourth-largest newspaper publisher.

· At least a half-dozen Chinese airlines have agreed to order 60 of Boeing's new 787 jetliners in a deal that could be worth as much as $7.2 billion.

· The U.S. economy finished 2004 with its best performance in five years as the gross domestic product rose 4.4 percent last year. That marked the strongest showing since a 4.5 percent gain in 1999. The U.S. GDP growth was higher than that of the United Kingdom (3.1 percent), but fell short of the 6.9 percent rise in Russia.

· Car lots may no longer be the domain of toupéed men. Women own nearly 7 percent of the nation's franchised new vehicle dealerships, reports CNW Marketing Research. And industry statistics show women have a say in roughly 80 percent of all vehicle purchases.

· General Motors Corp., the world's largest automaker, plans to put two safety features-OnStar in-vehicle communications service and electronic stability control-in all of its vehicles by the end of 2010.

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