Adriana Pinzón – Consulting Team
James Biteman - CEO
Subject: Recommendations about the acquisition of Sanford Corporation. Bearing in mind our philosophy or “profit growth by acquisitions”, I would like to recommend to the Acquisition team the evaluation of Sanford Corporation for purchase, for the following reasons: Even though it is a $600 Million acquisition, the most profitable company we have ever consider as a takeover target, it is a company with a very well establish reputation of good management , that can be easily adapted to our business model . Despite having a good management, they have less than ten people at corporate level, and a limited computer system. Also the company currently has distribution problems due to the purchases of Steriling Plastics Co., that fail to create a new sales base hindering there centralization shipping needs. This makes it ideal for our EDI System and improvement through our centralize management format. Their line of products “Sharpie”, “Accent”, and “Expo” are number one in the market share, but not one of the lines are predominant in their sales, giving as a very balance portfolio and the brand name recognition that we seek on our newly acquire companies. Since we into to the office supply market, acquiring Keene Manufacturing Co. and W.T Rogers, we have notice a shift in that market to retail channels do to small businesses managed from home. The Acquisition of Sanford Corporation, can give us access to that new market because their 8% share of sale to retail office suppliers superstores opposite to our 2% at Office Depot. With our “newellization” system we can group this new company with our existing office supplies ones, to multiply the potential success of the acquisition adhering to our CEO´s moto “ two plus two in not equal four, if we do this right, we get more than four¨, I project that with the grouping of this company we can fulfill our objective of increasing earnings per share growth 15% plus annually. . This are the reasons why our strategy to overhaul Sandfor Corporation will overcome the issue of the price at the acquisition.
Trends office super store, leverage wih the other products that they have, complete de package of office. 15 % annual growth EPS
Tiene brad # 1 lideres
Only 2.5 % of the its sales were in the mass
Superstores and ware house clubs commandes 8% of Sanford total volume
* Trend office super stores
Strategy is to be difereente ;
Make high volume /low cost product they know how to relate to and sell to a large rail instituted – large mass retailer We are building package for the mass retailes and acquisitions have been a vehicle to build that package Acquired companies that manufactured low technology, non seasonal, nosn cyclicail, non fasionable productos, that high volume reatiles would keep on the shelves year in and year out Newellization: focusing on operational efficiency and profitability (raise operational margines above 10% Centralization: achive effienciencies ( single sales force to sell of its products 1974 – Separe divisions for manufacturing and marketing, but centrally controlled by corporate –run administrative , legal and banking system Distributing primarily to mass retailers and home centers like Home Depot The newest generic business type business type was home office products Profit groth, not sales growth
Adquired businesses to focus on their core product, and align them with Newell´s core function. SG&A expense should never exceed 15%
Newellization, 18 months and often less than six months
Attractive acquisition target were:
* Domestic companies
* Manufatrue staple products
* Under brand-names that ranked #1 o #2 in market share.
* The most important asset in a...
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