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This wasn’t a big surprise—over 96% of Procter & Gamble’s shareholders approved the merger offer with Gillette. Later today, Gillette’s shareholders will vote to give their approval.

William Galvin, the Massachusetts Secretary of State, was on CNBC’s Squawkbox this morning. While there are a lot of things I don’t like about the merger, especially the outrageous $165 million payout that Gillette’s CEO is getting, I like even less how Galvin is going after them. He’s only recourse is to question the “fair opinion” that the companies got from their investment banks. So the government has to make its case that P&G’s offer, which was an 18% premium to the free market price, wasn’t a fair price. So what is a fair price? Galvin claims that P&G undervalued the deal by over $20 billion.

The market price of Gillette’s stock is determined the collective judgment of millions of investors. Yet this one person claims that they were all dramatically wrong. In fact, 18% more than that isn’t merely wrong—but unfair. Of course, it Gillette is such a bargain, why doesn’t the state buy it? By Mr. Galvin’s reasoning, this would be the best deal since the Louisiana Purchase.

Posted by edelfenbein at July 12, 2005 10:55 AM