Is That You, Al?

By Daniel Kadlec

The man known as Chainsaw Al pulled a fast one last week, buying three companies when everyone assumed he would be selling his own. In the process, the CEO of Sunbeam Corp., the small-appliance maker, carved a kindlier image for himself: Al Dunlap, builder. No, the Chainsaw did not have an attack of conscience. Dunlap, who seemed primed for an exit, decided to try something different. And in keeping with his flair for drama, he spent $1.8 billion in a single day for three companies--all with striking possibilities to complement one another: Coleman Co., which makes leisure equipment; Signature Brands, which produces Mr. Coffee coffeemakers; and First Alert, which manufactures smoke detectors. "We have a potential Procter & Gamble of world-class, branded durable goods," Dunlap crows.

This is no ordinary builder. Dunlap adds by subtraction--and he will run these appliance makers through his corporate Cuisinart. Jobs will go; tears will flow. But that doesn't mean Dunlap's makeover is a farce. He has an ambitious growth strategy, which he appears determined to stick around to oversee. That's new stuff for Dunlap, 60, a churn-around pro who in the past has followed swift cost cuts with the well-timed sale of his company. The formula worked wonders for shareholders in 1994-95 at Scott Paper, where he cut the head count 35%. The stock tripled. The script was being rewritten at Sunbeam, where the stock has quadrupled.

His new lineup gives him a leading global position in camping gear, gas grills, coffeemakers, smoke detectors and more. But for all the synergies, it is the potential for tried-and-true Dunlapian cost cutting that excites Wall Street. The biggest of his buys, Coleman, with '97 revenues of $1.2 billion, is roughly the same size as Sunbeam and has problems similar to those Dunlap faced at Sunbeam when he arrived in July 1996. Coleman essentially becomes Dunlap's next turnaround gig. Only he bought it instead of being hired. (Job hunting is such a drag.) If he can work his formula at Coleman, Sunbeam's stock will shoot much higher. With that in mind, Wall Street rolled out the red carpet, pushing Sunbeam shares up 24% in a week. Remember, an acquirer's stock generally goes down at first.

That is especially sweet music to Dunlap, who before signing those deals inked a more personal one that has already added a small fortune to the $100 million he made at Scott. Sunbeam gave Dunlap a new three-year contract granting him 300,000 shares and a staggering 3.75 million stock options--one of the 10 largest option grants ever, according to compensation experts SCA Consulting. That is on top of one he got in '96, a package now worth $130 million on paper. The new package, barely a month old, has already yielded Dunlap paper profits of $73 million. Never shy, Dunlap is quick to say he is well worth it.

And I'm not so sure he's wrong. He may be Chainsaw Al to the tens of thousands he has fired. But that name doesn't fit for the even greater numbers who have prospered with him. I hereby dub thee Equity Al, money in the bank. Maybe that moniker, like Dunlap at Sunbeam, will stick around awhile.

Daniel Kadlec is TIME's Wall Street columnist. Reach him at [email protected]