In the wake of housewares manufacturer Newell Co.'s announced intention to acquire Rubbermaid in a stock and debt transaction worth $5.8 billion, general-merchandise buyers contacted by SN said they expected the combination to benefit retail operations as well as the deal's participants.
With over $3 billion in 1997 sales, Freeport, Ill.-based Newell's housewares products include Mirro, WearEver, Panex and Calphalon cookware; Anchor Hocking glassware; Goody hair accessories; and the Sanford, Berol, Eberhard Faber, Eldon and Rolodex office product lines.
Rubbermaid, Wooster, Ohio, is the top manufacturer of plastic housewares for the mass market and is also a leading maker of children's toys and furnishings under the Little Tikes, Graco and Century brands.
The two manufacturers projected the combined company, to be called Newell Rubbermaid, would generate more than $6 billion in sales for 1998. Newell plans to integrate Rubbermaid's operations, which is expected to result in annual operating-income increases of $300- to $350 million and 98% on-time and line-fill performance.
For Hy-Vee Food Stores, West Des Moines, Iowa, the deal "could make buying housewares easier with a single purchase order," said a general merchandise buyer who asked to remain anonymous.
"I suppose the logistics will change and hopefully there will be one purchase order and one shipping point," said the retailer.
The combination of Newell's and Rubbermaid's divisions "may entice us to buy and warehouse some lines that we now either carry [but don't warehouse] or are supplied with through secondary distributors," the buyer said. "If there is enough volume, we'd bring them into our warehouse, especially since Newell isn't represented by a broker in our area."
Millard Garnaas, senior nonfood buyer at Los Angeles-based Certified Grocers of California, said, "Rubbermaid has been on a downward trend for the past few years, and I think this will put them in a better position. It's had competition from lower-priced plastics products."
Certified Grocers purchases products from several Newell companies, Garnaas said.
"We currently buy from individual Newell companies and not from Newell itself. Combining these two manufacturers might not involve any changes for us."
Garnaas said in Rubbermaid's case "it already has one sales force that takes care of a couple of previously merged divisions. Rubbermaid used to sell its ice chests as a separate division with its stick goods, and now the same sales force sells both."
Newell said once the transaction is completed it plans to improve operating efficiency and margins, giving the combined company broader acquisition opportunities and an increased ability to serve European markets.
