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Houston Chronicle 20 November 1996 By Charles Boisseau Knight-Ridder/Tribune Business News
The Houston company -- founded nearly 50 years ago as a maker of metal water coolers for oil-field and construction workers -- said Tuesday it signed an agreement to sell to Lake Forest, Ill.-based Brunswick Corp. for about $154 million in cash.
Brunswick is the world's leading maker of pleasure boats and marine equipment, operator of one of the largest bowling chains and a top maker of bowling equipment.
Privately owned Igloo would become part of a public company with $3.04 billion in sales last year.
The sellers are a group that includes majority owner Metropolitan Life and the management team at Igloo, which owns a small interest in the company, Igloo Chief Executive Jonathan Godshall said.
Igloo's officers have stock options, some of which will be cashed in as part of the purchase while others will be converted into shares of Brunswick, Godshall said.
Igloo will become part ofBrunswick's growing Outdoor Recreation Group based in Tulsa, Okla. The group includes Zebco fishing tackle; newly acquired Nelson Weather-Rite, maker of camping equipment; and Roadmaster Industries, maker of bicycles and Flexible Flyer sleds and wagons.
Brunswick has been expanding this group so it is less reliant on the cyclical boating business, which makes up about three-quarters of its sales.
"It's a good deal for Brunswick," Jill Krutick, an analyst with Smith Barney in New York, said of the purchase. She said the sales price is typical for such a transaction, equal to Igloo's annual sales of about $150 million.
Brunswick corporate spokesman Ross Stemer said the purchase "fits in with products we have." He noted every fisherman and camper takes along an ice chest or cooler.
Investors pushed up shares of Brunswick Tuesday by 1/8 to 25 on the New York Stock Exchange.
The companies said the transaction is expected to be completed early next year.
In Igloo, Brunswick is buying the leader in the more than $400 million U.S. market for ice chests, beverage coolers and jugs.
Igloo has about 42 percent of the U.S. market, ahead of No. 2 Coleman Co. and No. 3 Rubbermaid, said Ash Jaisin, president of Sports Market Research Group, a Boston sporting goods market research firm.
Unlike its rivals, which are involved in all manner of outdoor and storage products, "Igloo is focused on only one thing: ice chests, coolers and jugs," Jaisin said.
He added that, in contrast to Brunswick's recent purchases of camping and bicycle companies, "this time they bought a leader, so the money was well-spent."
Igloo has operated as a private company since it was bought by a group of investors in a 1987 leveraged buyout, led by Godshall and Igloo managers and backed by investors Metropolitan Life and the investment banker First Boston, which later sold its interest.
Godshall said Igloo hired an investment banker and began searching for acquisition partners earlier this year after Metropolitan Life officials said it was time for them to cash in their investment.
Metropolitan Life officials did not return a call seeking comment Tuesday.
The option of selling shares to the public was explored but rejected, partly because investors often shy away from highly seasonal businesses such as Igloo's, in which sales during its busiest month -- June -- are 10 times those in its slowest months, Godshall said.
Igloo entertained purchase offers from several companies, but in the end decided on Brunswick "because it made sense," he said. Among other things, he cited Brunswick's promise to keep Igloo as an autonomous operation. Also, Brunswick's other outdoor products divisions could offer Igloo expertise in marketing and other areas.
Godshall also said Brunswick could benefit from Igloo's stability during economic doldrums. Unlike sales of boats, which typically sink during economic downturns, sales of coolers and ice chests are aided by bad times, when people often do more camping, picnicking and similar outdoor activities, he said.
Igloo's roots go back to 1947, when it was founded as a metalworking shop called Igloo Manufacturing Co. to make metal water coolers used on the job.
While Igloo claims to make the only metal water cooler produced in the United States, it has expanded mostly in plastics, making the world's first all-plastic cooler in 1962.
Starting in the 1970s, Igloo was purchased by a series of new owners, including Anderson, Clayton & Co., the Houston consumer products company that also made such things as Chiffon margarine and Seven Seas salad dressings.
In 1987, a year after Anderson, Clayton was bought by Quaker Oats, Igloo was sold to the current owners.
Today, Igloo produces nearly 1,000 products -- if you count the various colors and configurations, including coolers on wheels and ones that plug into a car's cigarette lighter.
Thousands of motorists each day pass Igloo's water tower and manufacturing buildings at its headquarters at West Sam Houston Parkway and Interstate 10. Its other manufacturing plant and warehouse -- with about 500,000 square feet of space -- is located in Katy.
While sales slow down this time of year, Igloo's production operation is going full blast, churning out next year's product line.
Godshall and Vice President Lee Stranathan on Tuesday showed off one of two new 1,300-ton, $800,000 plastic injection molding machines -- the largest such machines in the Houston area, they say -- used to make insulated liners for Igloo coolers.
In the morning, Godshall had met with Igloo's employees to reassure them they expect no reduction in employment and operations. The company has about 1,500 workers, counting about 800 temporary workers it relies on during peak periods.
"We told them today the impact will be zero," Godshall said.
Stemer of Brunswick reiterated that message.
"Igloo people will continue to operate independently. They're not going to be merged into something else or swallowed up," Stemer said.
In fact, in a rare interview, Godshall said the company hopes to gain employment and business from Brunswick's other divisions, which do not have the plastics design and production expertise that Igloo has built over the years.
"We actually think it could be a growth opportunity," said Godshall, 48, a Harvard business school graduate who came to Houston in 1973 to work at Anderson, Clayton & Co.
It's the old adage, "if it ain't broke, don't fix it," Stranathan said. "This isn't a turnaround. This isn't a fix-up."
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