3M Buys Meguiar`s

**Lenny** · 09-09-2008, 06:57 AM

Originally Posted by paradigm

very helpful post with a great attitude. i didn`t realize history class included mid-sized corporate history as well.

Even my wife knows what 3M`s name stood for and where it was based. My attitude is what it is. BTW, number 100 on the Fortune 500 isn`t exactly a "mid-size company".

**Lenny** · 09-09-2008, 07:00 AM

Originally Posted by weekendwarrior

Well, they would be foolish to take Meguiar`s out of Southern Cal...that has to be the greatest car market in the country. But, typically with these scenarios, "duplicate" facilities and personnel are eliminated.

More likely than not, unfortunately. I wonder if which brand name will get the most marketing effort now.

**Bobby G** · 09-09-2008, 08:01 AM

Originally Posted by backwoods_lex

Why are the prices going to increase 10-15%? I`m not very business minded.

They go up every year in November after the SEMA show.

**Bobby G** · 09-09-2008, 08:38 AM

Originally Posted by rwisejr

Looks like 3M is buying up their main competitors . Hope this ain`t the old buy and squash the competition routine.

It isn`t likely that 3M is going to buy controlling interest in a $100-million company so they can squash it.

All you need to do is look 5-years back in history to see what is going on. In October 2005, Meguiar`s shacked up with Shansby Group, a private equity investment firm, to get succession financing for Barry Meguiar. Barry wanted the rest of the family out, but that hefty investment started a 5-year clock ticking.

If you look back over the past 5 years at what Meguiar`s has done, you`d see a significant slim-down. They brought all D-line manufacturing in house. They killed products and product lines that didn`t have an immediate pay back opportunity. They consolidated all warehousing. Then, finally, they outsourced all manufacturing and internet sales to 3rd party companies. That means they went from nearly 200 employees to about 100, making themselves easier to be snapped up if they could not pay back the debt. I didn`t even mention the Car Crazy show and web site here, which adds yet another spin on what`s happening.

In the same period of time, Armor All, which is the biggest brand name in the retail car care industry has failed to be profitable for Clorox while all of the other Clorox lines have. What happened here? Well, if my memory serves me, Jerry Johnston, the former Clorox CEO had a heart attack in 2006 and resigned. Jerry was pumping cash into Armor All by the fist fulls, and Armor All was using it to create failure after failure.

The new CEO of Clorox is Donald Knauss, who was previously the head of the North American operations of Coca-Cola. Guess what, Knauss knows food, not car care. Clorox has backed off its investments in Armor All, which I believe has now made Turtle Wax the number one retail brand (retail sales volume).

So, just like that 3M could step up to become the #1 retail name in car care and the #1 name in PBE. They have more chemists than anyone else on the planet (that may be an exaggeration, but not by much), they have top notch manufacturing, they have an amazing distribution system... it all fits.

:usa

**danponjican** · 09-09-2008, 08:48 AM

If this has the predicted effect of raising prices on the core products for 3M and Megs, this could have a positive outcome on the smaller boutique brands many of us love. They may become a greater value.

I wonder if Menzerna is next?

**Bobby G** · 09-09-2008, 08:58 AM

Originally Posted by Denzil

Whoa, I initially only had heard that 3M acquired Edge but now Meguiar`s? This is some pretty crazy news. I hope it`s for the best.

There is another point to make in regards to 3M`s acquisition of Edge (Dedication to Detail) and Meguiar`s. 3M values intellectual property (IP). Edge and Meguiar`s both have plenty.

In the case of Edge, Aaron Krauss and Co. have done an amazing job locking up the IP for a quick-release pad adapter and a dual-sided pad system. To 3M, this meant they would be locked out of the future of one of their largest divisions. Plus, what was a dominant market for 3M, the undulated foam pad ("waffle pad") has been rapidly chewed away by other designs because 3M got lazy.

Although I think the Meguiar`s patents are less impressive, they are plentiful and offer good opportunities. I would hope to the brush and accessory line Meguiar`s patented to go back into production with the 3M financial backing.

**Lumadar** · 09-09-2008, 09:05 AM

Originally Posted by DavidB

Although I think the Meguiar`s patents are less impressive, they are plentiful and offer good opportunities.

Yeah, all they have is that terrible idea called "micro abrasives" that make M105 and D151 both possible- those products suck! :laugh:

Just kidding with you :hifive:

I get what you are saying, and I think that it is a very valid point...both companies *could* gain and grow *if* managed properly through this merger.

Let`s hope for the best...

**Lenny** · 09-09-2008, 09:12 AM

Originally Posted by danponjican

If this has the predicted effect of raising prices on the core products for 3M and Megs, this could have a positive outcome on the smaller boutique brands many of us love. They may become a greater value.

That could be true, only up to a point. It depends whether the combined market share of 3M and Meguiar`s goes down after any projected price increase. If it doesn`t, then the boutique brands could view it as the breathing room needed for a price increase.

You have to keep in mind that a seller will try to charge the highest price the market can bear. If consolidating competitors causes a small price increase without a corresponding drop in sales, then the rest of the market could see that as a sign that they can raise prices to a certain degree.

**Wasatch** · 09-09-2008, 09:36 AM

WHOA! Never thought this would happen.

**Bobby G** · 09-09-2008, 09:42 AM

Originally Posted by Len_A

That could be true, only up to a point. It depends whether the combined market share of 3M and Meguiar`s goes down after any projected price increase. If it doesn`t, then the boutique brands could view it as the breathing room needed for a price increase.

I`m not sure where this notion of a price increase as a result of the 3M buy-out came from. Meguiar`s traditionally increases their prices in November with the introduction of new products at SEMA. The cost of petrol going up, up, up is the major factor in prices increasing. We will see it across the board, not just with Meguiar`s.

**the other pc** · 09-09-2008, 09:59 AM

Originally Posted by Mr.Concours

Anyone know the country of origin for 3M?

Here`s a hint; 3M is short for Minnesota Mining and Manufacturing.

PC.

**Bradbmx1** · 09-09-2008, 10:26 AM

I don`t think that its a bad move for Meg`s.

3M seems to be a pretty successful and responsible company.

Just like everything else in the world today, we should probably see a slight price increase.

**smokinfastlegen** · 09-09-2008, 11:54 AM

Im sure many of the Meg`s products we know and love wont be removed. Megs just released the g110, though competition to flex and UDM, it is a machine that could be marketed better (and because its ease of use compared to a rotary could prove beneficial if 3m is willing to market it in mass market stores.) Also my local pbe recommended that I dont use 3m polish with a PC do to the fact that 3m polish was designed for rotary use (though im not too sure on how accurate this is.) If it is true, 3m could make a killing off of keeping a DA branded polish that could essentially become "consumer" level.