Spectrum Brands Essay

5171 Words Apr 26th, 2008 21 Pages
A Strategic Analysis

TABLE OF CONTENTS
INTRODUCTION 1
WORLD MARKET 1
CORPORATE HISTORY 1
GROWTH STRATEGY 2
SPECTRUM AND UNITED INDUSTRIES 2
GROWTH STRATEGY 2
SPECTRUM BRANDS 3
MANAGEMENT 3
STRATEGY 3
RELATED DIVERSIFICATION 3
UNRELATED DIVERSIFICATION 4
MARKETING 5
MANUFACTURING, RAW MATERIALS, DISTRIBUTION, AND SUPPLIERS 10
CONSOLIDATION EFFORTS 10
RAW MATERIALS 11
DISTRIBUTION AND SUPPLIERS 12
SPECTRUM BRANDS FINANCES 12
SALES 12
INCOME 13
PROFITABILITY RATIOS 13
LIQUIDITY RATIOS 14
LEVERAGE RATIOS 15
ACTIVITY RATIO 16
SHARE PRICE 17
RECOMMENDATIONS 18
REFERENCES 19

INTRODUCTION
Spectrum Brands (SPC) is a global branded consumer products company with seven major product lines including Rayovac
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In 1998 the Thomas H. Lee (THL) company became the majority owner of United with 84.3 percent stake in the business at a cost of US$660 million dollars11.
Growth Strategy
United also grow its business using the same merger and acquisition strategies as Rayova. In 2002, United Industries acquired Schultz Co., maker of consumer garden fertilizers, plant food and potting soils sold under the Garden Safe brand, at a cost of $58 million in cash and stock. Later in 2002, United Industries paid $19.5 million in cash to acquire WPC Brands an insect repellent and outdoor health and safety products manufacturer thus becoming the second largest personal insect repellent brand behind S.C. Johnson, which controls about half of the market. The next acquisition was in 2004 with the $143.8 million purchase of Nu-Gro Corporation of Canada. United Industries was dependent on three major retailers. Lowe's, Home Depot, and Wal-Mart accounted for 71 percent of the company revenues. To reduce the risk and dependency, in 2004 United acquired United Pet Group Inc. for $360 million, a pet supplies company with annual sales of $250 million12.
SPECTRUM Brands
In 2005, Rayovac which spun off from THL, acquired United Industries from THL for 1.2 Billion dollars13. The $1.2 billion deal was financed with $406 million in stock, $70 million in cash and assumed a debt of $880 million from United Industries. In 2005, Rayovac changed its

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