Housewares markets will never be the same when Newell Co. takes control of Rubbermaid Inc.
Last fall, the two companies agreed to merge operations to create a consumer products giant with annual sales of more than $6 billion. Newell Rubbermaid will be the largest durable consumer products maker in the world and the fifth largest in consumer products overall.
Rubbermaid, a household name since its founding in 1920, accepted the marriage to improve its production and marketing efficiencies. Despite a massive overhaul over two years to cut costs, the Wooster, Ohio, company still had trouble matching competitors' prices in plastic storage containers and a range of other injection and rotationally molded products.
From the most admired company in the United States in Fortune's 1995 survey, it slipped to number 100 in 1998. Net profit, including restructuring charges, slipped to $82.9 million in 1998, its last full year as a separate company. In 1997, not a banner year, it earned $142.5 million. Rubbermaid's imminent ``Newellization'' is aimed at getting a minimum 15 percent pretax profit margin. The firms have said they have no plans to close plants or cut their work forces.
Though the Rubbermaid name will continue in the market, how the firm does business will change. Newell has a good reputation for integrating new businesses. It has a lot of practice — it has grown through nearly 75 acquisitions, including a dozen this decade.
``No one manages the blocking and tackling of consumer-products customer service better than Newell,'' said Rubbermaid Chairman and Chief Executive Officer Wolfgang Schmitt, when the deal was announced. Newell will gain from Rubbermaid's product innovation, brand recognition, broad distribution and European presence.
Analysts, like Eric Bosshard of Midwest Research in Cleveland, lauded the deal, predicting Newell has the tools to improve Rubbermaid's ability to compete with smaller, nimbler rivals. ``It's a fantastic fit,'' he said.
The deal should be final by the end of the first quarter. The fact that the firms' product lines don't overlap much helped them get the approval of the European Commission and the U.S. Securities Exchange.
Newell of Freeport, Ill., has agreed to pay about $5.8 billion in shares for 60 percent interest in Newell Rubbermaid Inc. Newell Chairman William Sovey will become chairman of the merged firm. Schmitt will share the title of vice chairman with John McDonough, Newell's vice chairman and CEO.
