On Wednesday came the long-awaited news that Newell Rubbermaid had completed its acquisition of label-writing brand Dymo for approximately $730 million. The deal – which was primarily engineered by ex-CEO of Newell, Joe Galli – was completed ahead of schedule.
With the completion comes a huge sigh of relief from within the Esselte camp. The divestiture of Dymo – for what many in the industry believe to be an overvalued sum – will allow the Swedish manufacturer to pay off substantially all of its current debt, concentrate on its remaining core business of organisation and presentation solutions, and up its investment in its craft range, Xyron.
Magnus Nicolin, president/CEO of Esselte, said in a statement: "After taking Esselte private in July 2002, we invested heavily in the Dymo business through personnel, advertising and accelerated product development. The sale of Dymo is validation that our strategy for building value was solid."
Steve Marton, group president of Newell Rubbermaid’s OP group Sanford Brands, was upbeat in his interview with OPI+ on the day of the completion, claiming the deal was "worth every cent" and is a "win-win" for both Dymo and Sanford.
"I am very excited about the acquisition. We wouldn’t have undertaken an acquisition of this magnitude if we didn’t think it could add great value to the company. Dymo brings buying growth and innovation to the market and Sanford brings value on the sales side and a depth and understanding of the industrial channel, which overlaps with Dymo’s industrial sectors."
Marton confirmed that Sanford is committed to expanding Dymo’s product portfolio by investing in both the OP printing and labelling segment as well as the industrial segment.
To claims that Newell – which has only returned to profit in the last year assisted by widespread cost cuts – could not afford the label writing brand, Marton said: "We are not highly leveraged so can pay for this with our own cash flow that we have acquired over the last couple of years. This will not impact how we run our business. We are able to invest fully behind the Dymo brand and take full control of it."
Although in previous interviews Newell has announced that it will make no staff cuts as a result of the acquisition, Marton did not rule out the possibility in his interview with OPI+. He simply said: "We will run the business with the appropriate resources, however that may be."
Going forward, although Dymo is wholly-owned by Newell, Esselte will continue to provide "transitional services", including a salesforce in countries such as Germany where the Esselte brand is better known than the Newell brand and more able to push the products to market. This has fuelled scepticism among some members of the industry which claim that Esselte salespeople will have little incentive to push a Newell product. In his interview with OPI+, however, Marton claimed "it is Newell’s responsibility to make sure that this doesn’t happen".
"We plan to leverage the synergies of the sales operations of Newell and Esselte and accelerate the growth rate of Dymo from that under Esselte," he added.
