Frankfurt, Germany – Procter & Gamble said Tuesday it has agreed to buy a majority stake in German hair care firm Wella AG for $7.02 billion (6.5 billion Euros) in cash and plans to launch an offer to remaining shareholders for all outstanding shares.

The deal was seen by analysts as boosting U.S. consumer goods giant competitive posture against French arch-rival L'Oreal. P&G said it had reached an agreement with the German company's family owners. The stake totals 77.6% of Wella's voting shares.

P&G said it intends to make a tender offer for the remaining voting and preference shares of Wella. P&G will offer a cash price of Euro 92.25 per share for the voting shares, and Euro 61.50 per share for the preference shares, valuing the total shares at Euro 5.4 billion. P&G said it may, however, offer Wella's preference shareholders the option of accepting P&G shares as an alternative to the cash offer.

This deal is subject to normal regulatory review and government approvals in various markets including the European Union and the U.S.

"Wella is a leading beauty and hair care company with strong brands, excellent management and an organization with deep expertise in the beauty business," said A.G. Lafley, P&G chairman and CEO. "This acquisition is a great strategic fit given P&G's leadership and proven strength in its core hair care business. The deal further expands P&G's beauty businesses across Eastern and Western Europe, and in Latin America."

"P&G and Wella are in highly complementary businesses," said Lafley. "Wella's strength in professional hair care complements P&G's strength in retail hair care. Wella's strength in color and styling complements P&G's strength in shampoo and conditioners. Wella's strength in Europe complements P&G's strength in North America."

Lafley said Wella's professional business has averaged double-digit sales growth over the last three years, well ahead of the annual industry growth of about 5%.

P&G estimated professional salon hair care sales at $10 billion globally. Wella estimates it has a 22% global share.