Combining the retirement plans of The Gillette Co., Boston, and Cincinnati-based Procter & Gamble Inc., might not go as smoothly as a shave with Gillette's "Mach 3" razor.
That's because Gillette employees could see their $1.3 billion defined benefit plan frozen, plus the bundled providers for one of the companies' defined contribution plans could get axed.
P&G agreed on Jan. 28 to acquire Gillette in a $57 billion stock sale, pending regulatory approval. Money managers familiar with both companies speculated that because P&G's $300 million defined benefit master trust has been frozen to new employees for the past four years, P&G may freeze Gillette's as well.
Additionally, the combined company might have to choose between Fidelity Institutional Retirement Services Co., Boston, the bundled provider to P&G's $10 billion profit-sharing and employee stock ownership plan, and JPMorgan Fleming Asset Management, New York, bundled provider to Gillette's $2 billion savings/401(k) plan.
According to the most recently published information on the companies' retirement plans (from the 2004 Money Market Directory), P&G offers five defined contribution investment options. Gillette's savings plan offers nine.
P&G offers balanced, short-term cash, company stock, corporate bonds and large-cap equity funds. Gillette's options are short-term cash, emerging markets equities, large-cap value, GICs/BICs, growth equity, global equity and two passive index equity funds.
In both cases, all options are from the bundled providers' fund supermarkets.
Gail Sullivan, assistant treasurer at Gillette, declined to comment; repeated calls to David Tiersch, director of pension investments and administration at P&G, were not returned.