Sunbeam buying 3 firms, not B&D Coleman, First Alert and Signature fetch total of $2.5 billion

Manufacturing

March 03, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Sunbeam Corp. yesterday announced plans to buy three companies for $2.5 billion -- deals that analysts said appear to rule out a purchase of Towson-based Black & Decker Corp.

"I think that's gone" as a possibility, said Michael Chren, portfolio manager of Eagle Asset Management Inc.

Black & Decker emerged as a potential target in October, when Sunbeam Chairman Al Dunlap said his household products company was considering buying other companies or selling itself. Chren said he originally considered Black & Decker a target because it fit criteria laid out by Dunlap -- a big company, strong brand and a sometimes disappointing stock performance.

Yesterday, Sunbeam agreed to buy Coleman Co. and the makers of Mr. Coffee machines and First Alert smoke alarms for a total of $2.5 billion -- a combination of stock, cash and assumed debt.

The additions of Coleman, a maker of tents, lanterns and camping products, Signature Brands USA Inc. and First Alert Inc. will raise Sunbeam's revenue about 2 1/2 times to nearly $3 billion and add to earnings within a year, Dunlap said.

Dunlap said he plans more acquisitions: "We're not done, so that I don't know that anyone should particularly sleep well."

He wouldn't say yesterday whether Black & Decker is a potential target. But Rich Goudis, vice president of investor relations for Delray Beach, Fla.-based Sunbeam, said buying the entire power tool company runs counter to Sunbeam's strategy to consolidate in its industries.

He said Sunbeam might consider buying the household products divisions that Black & Decker put up for sale as part of a restructuring announced in late January. "Obviously we're in similar businesses, so it goes without saying," he said. "We have the capacity to do more acquisitions."

Daniel Noll, a Chapman Co. analyst, said a deal for Black & Decker appears remote, "given the leverage of Sunbeam's balance sheet."

Sunbeam expects to take an undisclosed charge in 1998 to restructure the acquired businesses and cut costs. About $1.5 billion in goodwill will be amortized over 40 years.

A Black & Decker spokeswoman said the company wouldn't comment on what she called rumors of Sunbeam's interest in all or part of Black & Decker. She said "different parties" have expressed interest in household products, but she wouldn't name the parties.

Black & Decker's restructuring plans include the sale of its household products businesses in North America, Latin America and Australia and the elimination of 3,000 jobs.

Investors have reacted favorably to the company's plans to sell the divisions that produced Dustbuster and SnakeLight, driving shares of Black & Decker from $39.125 at the beginning of the year to the $50 range. Shares fell 50 cents to $49.875 yesterday.

Chren said Dunlap might have his eye on Black & Decker's household products business, but that he might not want to act right away. "He's got a lot on his plate," Chren said. "He's not finished buying. But I don't know what the timetables are. Black & Decker probably wants to find a buyer for household [products] pretty quickly."

Goudis said Black & Decker is only one of many potential Sunbeam targets. One possible stumbling block is that Black & Decker might demand top dollar for some of its brand names. "There are other companies that are intriguing," he said.

Sunbeam stock rose $3.875 to $45.625 in trading of 6.5 million shares, nine times the three-month daily average. Coleman shares rose $10.063 to $30.9375. Signature shares rose $2.781 to $8.031, while those of First Alert gained $2.031 to $5.156.

In another development yesterday, Newell Co., a household and consumer products company, said it may sell some or all of its 8.3 percent stake in Black & Decker.

Freeport, Ill.-based Newell signed an agreement with Black & Decker, letting it sell some or all of its 7.86 million common shares, according to documents filed by Newell with the Securities and Exchange Commission.

Pub Date: 3/03/98

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