Mergers and Acquisitions and Rubbermaid

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As a member of the Newell Board, evaluate the proposed merger with Rubbermaid. How would you vote? I would vote against the propose merger with Rubbermaid for the following reasons:

1. Difficulty in the “newellization” of Rubbermaid
One of the key factors to successful acqusition is the execution of the integration process. •“Newellization” is defined as an “enhancement process employed to bring a newly acquired business up to Newell’s high standards of productivity and profit.” Part of the process is to centralize key administration functions such as data processing, accounting, EDI, and inauguration of Newell’s rigorous operating control system. Unfortunately, Rubbermaid is weak in all these areas. For example, although Rubbermaid excels in creativity and merchandising, it is a laggard in “mundane areas” of its operations. It seems like Rubbermaid has the exact opposite of the qualities that Newell has targeted in the past for mergers.

2. Newell may not the capacity to integrate Rubbermaid
The “newellization” of Rubbermaid is also made more difficult by the sheer size of the company. The majority of Newell’s past acquisitions have been relatively smaller companies that they have successful applied the newellization process and generated great synergy. In the case of Rubbermaid, it is a company that is worth billions; therefore, Newell may not have the necessary experience needed to integrate such a massive company. Even if “newellization” is possible, it may take a long time because it is difficult to suddenly change the operations of a well-established company, like Rubbermaid.

3. High risks involved in the acquisition of Rubbermaid due to its existing problems. •Newell has gained a reputation for making successful acquisitions using an established process called “newellization.” One of Newell’s fundamental competitive strategies is to differentiate on the basis of providing superior customer service to its customers. Rubbermaid...
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