Q2. Will this core competence create value in Newell's acquisition of Calphalon?

By acquiring Calphalon, Newell aims to gain the following:

 Learn how to use pull strategies to connect with the end consumer to protect its
market share from low-cost competitors.
 Broaden Newell's reach and presence in departmental and specialty stores and gain
access to a new market of premium cookware, a segment where Newell is not present.
 By keeping Calphalon lines in departmental stores, Newell was able to keep
WearEver as the best brand for mass merchandisers without any cannibalization.
Newell can apply capabilities of "Newellization" to control Calphalon's increasing COGS
and high SG&A (36%) expenses by focusing on profitability and discipline to financial,
organization, and manufacturing processes while maintaining the Calpahlons competencies
that make the brand appealing to the premium end-user. Although the acquisition will create
value for Newell, it can also present some challenges. Typically, under "Newellization,"
Newell keeps the acquired firm's brand name but discards the existing people and processes.
However, there is a balance between "Newellization" and protecting the Calphalon brand's
integrity, which has built its brand equity-backed on its sales approach and efforts focused on
educating the customers about the product. If taken too far, "Newellization" might erode
Calphalon's premium service and destroy the barrier of entry for premium competitors at
high-end retailers.
Q3. Will this core competence create value in Newell's acquisition of Rubbermaid?
By acquiring Rubbermaid, Newell aims to gain the following:
 Opportunities for globalization and internal growth that came with Rubbermaid.
 To build a strong brand to withstand the growing power of mass retailers, given a
large part of their revenue came from these customers, and they had high bargaining
power.
 As per research, brands with a market capitalisation of $10 billion can garner higher
earnings multiples and prices, which helps in acquisitions.

Rubbermaid has strong mass retailers' relations but inefficient operations. Due to the increase
in resin cost, COGS went up to 73% as a % of sales in 2007. It also faced logistics and
services related issues. By leveraging its operational and financial systems and synergies
from existing business, Newell could improve Rubbermaid's deteriorating position by
controlling Rubbermaid's costs, pushing margins to ~9%-11% net income as a percentage of
sales.
Though Rubbermaid fits Newell's action criteria and corporate strategy, the $5 billion paid
acquisition seems high after considering the post "Newellization" forecast. The net present
value of future cash flows is a~ $2.2 billion for Rubbermaid, half the acquisition price. This
excess premium paid makes any potential synergies or value creation questionable since the
company will need to overcome this premium to get any value out of this transaction. The
amount of value added by this transaction will depend on how well Newell can absorb
Rubbermaid. Rubbermaid is ~75% the Newell size, which would mean a much longer period
of "Newellization" compared to the usual six months. If the "Newellization" process takes too
long, Newell will need to invest a lot more time and resources in this integration, reducing the
time for focus on other acquisitions. Rubbermaid's competence in new product development
adds value to Newell. If Newell were to absorb Rubbermaid, a cultural misfit might alienate
the new workforce and destroy the processes that promote new product
development. Overall, the acquisition of Rubbermaid does not seem like a good fit.