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Sunbeam's shopping spree
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March 2, 1998: 2:42 p.m. ET
Ceasing `chainsaw' tactics, Dunlap targets three firms for $2.5 billion
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NEW YORK (CNNfn) - Shares of Sunbeam Co. edged up nearly 4 points Monday after the company announced plans to acquire three companies for nearly $2.5 billion and promised to triple sales next year of its newly souped-up line of small home appliances and equipment.
Sunbeam's stock rose 3-3/4, to 45-1/2 in midday trading on the New York Stock Exchange, after it agreed to acquire The Coleman Co., a leader in outdoor recreation and hardware products; Signature Brands USA, the maker of Mr. Coffee machines and consumer health products; and First Alert Inc., the world's largest maker of residential safety equipment.
Coleman, with $1.1 billion in revenues in 1997, accounted for nearly $2 billion of the purchase price.
News of the acquisitions came as company officials also announced that Albert Dunlap, its maverick chief executive officer, had signed a new three year contract. Dunlap, who refers to himself as "Rambo in pinstripes", is notorious in the corporate world for cutback policies that have earned him the moniker `Chainsaw' Al.
He has applied his slash-and-burn precepts with chilling success at Sunbeam, slashing half the workforce and shedding all but the company's core units to bring company profits $109 million into the black from a $229 million loss the year he took over. Sales last year were up 22 percent.
"Sunbeam was a basket case, now its a world leader," Dunlap told CNNfn Monday. He asserted that the single-day acquisition of three publicly-traded companies by a single firm, was unprecedented. (90K WAV) or (90K AIFF).
The combined operations would couple Coleman's specialty leisure and camping products, with Sunbeam's existing lines of outdoor cooking products. Coleman's traditional strength in European and Asian markets would also supplement Sunbeam's strong presence in South and Central America, Dunlap added.
Last October, following what he called his company's "dramatic" turnaround, Dunlap hired an investment banker to find a possible suitor or takeover target. To acquire Coleman, Sunbeam will pay $815 million and finance the rest with debt. Coleman's shareholders will receive $6.44 cash and 0.5677 shares of Sunbeam for each of Coleman's share, whose value is pegged at $31.84 based on Monday's stock price.
Coleman, based in Wichita, Kan., operates 17 manufacturing facilities and employs about 6,000 people around the world. Coleman's stock was trading up 10-1/8, at 31 midday Monday.
The Signature Brands deal is valued at about $250 million consisting of a cash tender offer of $8.25 per share plus the assumption of debt. Shares of Signature Brands USA, a maker of household products, jumped 2-13/16, to 8-1/16 by mid-afternoon.
First Alert Inc., which specializes in home safety devices including fire alarms and extinguishers, will be acquired for $175 million, including a cash tender of $5.25 and debt assumption. The company's shares spiked sharply to 5-1/8, a two point rise.
Dunlap said the successful turnaround of Sunbeam, including the dramatic improvement of the underlying business, had provided "a solid platform for profitable growth." He predicted few problems integrating the new companies into Sunbeam's corporate fold. (287K WAV) or (287K AIFF).
Sunbeam executives say they hope to achieve $150 million in savings from the overall deal, which it estimated will double annual revenues to $1.2 billion.
Whatever the case, for Sunbeam the acquisitions mark a major strategic shift. In November 1996, Dunlap stunned the corporate world when he announced he would slash 50 percent of Sunbeam's 12,000-person workforce, consolidate and shed several of the company's businesses. Along the way he shed 87 percent of Sunbeam's products.
More recently, however, Dunlap seemed to signal a slight change of heart. On Monday, he cited the acquisitions as proof that he had kept his word to expand the company.
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Sunbeam
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