Cooper's Case

Coopers Case

* Facts

* Cooper Industries

* Manufacturer of heavy machinery and equipment

* 50’s- leading producer of engines and massive compressors used to force natural gas through pipelines and out of oil wells

* Cooper Industry Risk

* Heavy reliance on oil and gas industries for sales

* Cyclical nature of equipment sales

* Acquisitions ’59-’66:

* Supplier of portable industrial power tools

* Small manufacturer of industrial air compressors

* Small manufacturer of pumps for oil field applications

* Producer of tire changing tools for auto market

* Acquisition Requirements ’66+

* Industry in which Cooper could become major player

* Industry should be fairly stable, with a broad market, for the products and a product line of “small ticket” items.

* Acquisitions ’67; Lufkin Rule Company

* Largest manufacturer of measuring rules and tapes

* Quality product line with established distribution system of 35,000 hardware stores in US, Canada, and Mexico

* Management Integrations

* William Rector and Hal Stevens

* Knowledgeable about hand tool business

* Goal – Synergies:

* Build a hand tool company with full product line

* Use common sales and distributions system

* Also, they would use joint advertisement

* Lufkin needed Coopers financial strength

* Acquisition ’69: Crescent Niagara Corporation

* Demonstrated profitability in the early 60’s, but suffered under recent years under the mismanagement of some investor entrepreneurs who gained control in ’63.

* Cooper eager to add Crescent’s known and high-quality product line: wrenches, pliers, and screwdrivers.

* Clear that some of Crescent’s bad acquisitions and inefficient plants would have to be closed.

* Acquisition...