Word: sunbeam
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...known as Chainsaw Al pulled a fast one last week, buying three companies when everyone assumed he would be selling his own. In the process, the CEO of Sunbeam Corp., the small-appliance maker, carved a kindlier image for himself: Al Dunlap, builder. No, the Chainsaw did not have an attack of conscience. Dunlap, who seemed primed for an exit, decided to try something different. And in keeping with his flair for drama, he spent $1.8 billion in a single day for three companies--all with striking possibilities to complement one another: Coleman Co., which makes leisure equipment; Signature Brands...
...churn-around pro who in the past has followed swift cost cuts with the well-timed sale of his company. The formula worked wonders for shareholders in 1994-95 at Scott Paper, where he cut the head count 35%. The stock tripled. The script was being rewritten at Sunbeam, where the stock has quadrupled...
...position in camping gear, gas grills, coffeemakers, smoke detectors and more. But for all the synergies, it is the potential for tried-and-true Dunlapian cost cutting that excites Wall Street. The biggest of his buys, Coleman, with '97 revenues of $1.2 billion, is roughly the same size as Sunbeam and has problems similar to those Dunlap faced at Sunbeam when he arrived in July 1996. Coleman essentially becomes Dunlap's next turnaround gig. Only he bought it instead of being hired. (Job hunting is such a drag.) If he can work his formula at Coleman, Sunbeam's stock will...
That is especially sweet music to Dunlap, who before signing those deals inked a more personal one that has already added a small fortune to the $100 million he made at Scott. Sunbeam gave Dunlap a new three-year contract granting him 300,000 shares and a staggering 3.75 million stock options--one of the 10 largest option grants ever, according to compensation experts SCA Consulting. That is on top of one he got in '96, a package now worth $130 million on paper. The new package, barely a month old, has already yielded Dunlap paper profits of $73 million...
...with the foundations. "We as class-A [nonvoting] shareholders are impotent to effect any kind of change," complains Jonathan Lewis, an analyst at Franklin Mutual Advisors, which is headed by the feared raider Michael Price. The outfit, which has made runs at Dow Jones & Co., Chase Manhattan Corp. and Sunbeam Corp., wants Grune gone. Says Lewis: "Grune is an ineffective manager, and I think the board of directors should expeditiously seek to replace him and/or to pursue the sale of the company." It's not quite the welcome back Grune anticipated when Digest lured him out of retirement to reclaim...