Newell / Rubbermaid Case Study - Strategy
NEWELL / RUBBERMAID
Analysis
BACKGROUND
In October 1998, Newell Company was considering a merger with Rubbermaid Incorporated to form a new company, Newell Rubbermaid Incorporated. The amalgamation would be through a tax-free exchange of shares valued at $5.8 billion. Newell had three major product groupings: Hardware and Home Furnishings, Office Products, and Housewares. Rubbermaid is a renowned manufacturer of a wide range of plastic products ranging from children's toys through housewares.
Acquisitions are the foundation of Newell's growth strategy and the company has an aggressive and disciplined approach to achieving its' growth targets. Newell focuses on acquisitions that are generally mature businesses with 'unrealized profit potential', and pass a number of clearly defined screening criteria.
If the transaction is completed, Newell will begin the process of assimilating Rubbermaid's operations through a process called "Newellization." The companies expect that the merger will create synergy through the leveraging of Newell Rubbermaid brands. By 2000, these efforts are
ANALYSIS
The Newellization process
The Newellization process is based on the prospective acquisition target having a number of attributes that correlate with Newell's requirements of a target organization. The first step in this analysis is that of Newell's screening criteria applied to the Rubbermaid opportunity.
The first criteria is that the target organization must be a mature business. Rubbermaid was started in 1920 when five businessmen who made toy balloons launched Wooster Rubber. The organization has been continuously run since 1920 and has had a great deal of success over the years. The company name has become synonymous with plastic dishware and storage units.
The next attribute desired of a company to undergo the Newellization process is the existence of Unrealized Profit Potential. In 1995, Rubbermaid at 75 was troubled by rising competition, increased demands from
Analysis
BACKGROUND
In October 1998, Newell Company was considering a merger with Rubbermaid Incorporated to form a new company, Newell Rubbermaid Incorporated. The amalgamation would be through a tax-free exchange of shares valued at $5.8 billion. Newell had three major product groupings: Hardware and Home Furnishings, Office Products, and Housewares. Rubbermaid is a renowned manufacturer of a wide range of plastic products ranging from children's toys through housewares.
Acquisitions are the foundation of Newell's growth strategy and the company has an aggressive and disciplined approach to achieving its' growth targets. Newell focuses on acquisitions that are generally mature businesses with 'unrealized profit potential', and pass a number of clearly defined screening criteria.
If the transaction is completed, Newell will begin the process of assimilating Rubbermaid's operations through a process called "Newellization." The companies expect that the merger will create synergy through the leveraging of Newell Rubbermaid brands. By 2000, these efforts are
ANALYSIS
The Newellization process
The Newellization process is based on the prospective acquisition target having a number of attributes that correlate with Newell's requirements of a target organization. The first step in this analysis is that of Newell's screening criteria applied to the Rubbermaid opportunity.
The first criteria is that the target organization must be a mature business. Rubbermaid was started in 1920 when five businessmen who made toy balloons launched Wooster Rubber. The organization has been continuously run since 1920 and has had a great deal of success over the years. The company name has become synonymous with plastic dishware and storage units.
The next attribute desired of a company to undergo the Newellization process is the existence of Unrealized Profit Potential. In 1995, Rubbermaid at 75 was troubled by rising competition, increased demands from