Sorry for continuing to show Rubber Maid may have had issues other than Walmart, but here is an excerpt for a Business Week article in 2003 on the merger.
http://www.businessweek.com/magazine...4137_mz026.htm
Quote:
This is why the next time a pair of CEOs predict a merger of their companies will create synergies, you should tell them to stuff it in a 32-gallon Rubbermaid trash can. In the 10 years before the Rubbermaid deal, Newell's shareholders had grown used to annual average total returns of nearly 23% -- four percentage points ahead of the Standard & Poor's (MHP ) 500-stock index. In 1998, when Newell agreed to buy Rubbermaid with $5.8 billion worth of its stock, the two companies enjoyed a total stock market value of $12 billion. Today, at $22 a share, Newell Rubbermaid brings about half of that.
Investors can't hang this merger from hell on Galli; he came in as CEO from Amazon.com (AMZN ) in 2001. And, even if Newell Rubbermaid has been guilty during his tenure of promising the Street too much, too fast -- in July, he lowered earnings guidance for 2003 -- the company is on a sounder footing than recent action in its stock implies. I can't give you odds on whether Galli will survive the current crisis -- and he isn't talking. But as I see it, if he does survive it'll be because the company shows solid progress and the stock recovers. If he doesn't, the stock will rally on hope of better management.
UNDERLYING THE TURMOIL is a steadily profitable, if slow-growing, maker of a gazillion everyday things: Rubbermaid containers, of course, plus Little Tikes toys, Sharpie, Parker, and Waterman pens, Calphalon cookware, and Levolor blinds. In the 12 months ended June, these products and more brought $262 million in net profit on revenue of $7.7 billion. Operating cash flow came to $711 million.
A nagging problem, however, is where all that cash flows next. Of the $711 million, $339 million went to capital projects. Of that, Rubbermaid consumed the greatest share among the company's four segments. Yet Rubbermaid in 2002 contributed just 35% of sales and even less of the company's operating profit. No one doubts that Newell wildly overpaid for Rubbermaid. The persistent question is whether it's continuing to overpay by plowing so much fresh cash back into Rubbermaid's new-product programs and productivity initiatives. Results in the first half ended June 30, when Rubbermaid sales grew just 1.4% and operating income actually fell 5%, suggest the answer is yes.
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These companies generated $262 million in net profit on $7.7 billion in sales. The company invested heavily in the Rubber Maid brand and the article suggests that Newell overpaid for the company. Rubber maid was a company on the decline before and after Walmart.
These facts suggest that Rubber Maid was complacent. A big fat happy corporation taking things for granted. As Jim Cramer says - "...pigs get slaughtered"