In December of 2015 the CEO of Jarden Corp. negotiated a deal where he sold his company to Newell Brands and got a huge personal payout. He also negotiated that he would become a member of the new Board of Directors. The prior CEO of Newell became the CEO of the newly-merged organization which retained the name of Newell.
As with most mergers and acquisitions, the two CEO’s involved predicted huge savings ($500 million) by combining their research, supply chains, and back-office operations. The name brands that Jarden brought to the party were Mr. Coffee, Rawlings baseball gloves, Coleman camping gear, and others. Newell was the marketer of Graco strollers, Elmer’s Glue, Rubbermaid containers, and others.
Once the merger was announced, things went south! From his seat on the new board of directors, the prior CEO of Jarden began to question virtually every move made by the Newell CEO. For example, in May of 2017, Newell struck a deal to sell former Jarden winter sports brands, like K2 skis, for $240 million. The prior CEO of Jarden raised a stink with the Newell board of directors saying the business had been sold for too low of a price and he publically criticized the Newell CEO and board.
Soon after that, the Newell CEO reorganized the sales personnel into teams of generalists shared by the various divisions of Newell. This was a dramatic shift versus the prior sales teams which were focused on specific businesses. Chaos ensued and Newell revenue suffered badly in the 2017 holiday season. Naturally, the prior Jarden CEO again got the board very involved in analyzing this “huge mistake.”
It was about this time that the prior Jarden CEO decided that he really should be Chairman of the Board of Directors and launched a major effort to make that happen. As you would guess, the Newell board was tired of this guy at this point and rejected the proposal, causing the embarrassed prior Jarden CEO to resign from the board.
Through all of this infighting, the financial results of this merged company have been a disaster. The share price of the combined company has tumbled from a high of $54 just after the merger to $26 today.
Most financial analysts who followed these companies have been very vocal that the core problem with this merger was the deep mistrust between the two men who decided to initiate this merger. The deterioration of the relationship between the prior CEO of Jarden and the Newell CEO was a disaster.
The lesson here is very clear. In any organization, be it one formed by the merger of two organizations, or any other, there needs to be one clear leader and anyone who is contesting that leadership in a dysfunctional, non-constructive way needs to be terminated.