BRAND BEHEMOTH
Merger of Newell Rubbermaid and Jarden puts 100 brands under one roof.
Newell Rubbermaid Inc. has agreed to buy Jarden Corp. for about US$ 15.4 billion, creating a consumerproducts giant with a sprawling portfolio of brands.
The new company, called Newell Brands, will have US$16 billion in sales, according to a statement Monday. Jarden holders will receive cash and stock valued at about US$ 60.03 a share — 24 per cent higher than the closing price on Dec. 4, the last trading day before media reports said merger talks had begun.
The deal is a bet that Newell can gain efficiency and clout from Jarden’s more than 100 far- flung brands, including everything from Oster appliances and K2 skis to Yankee Candle. Newell Rubbermaid chief executive Michael Polk, who will run the combined entity, is aiming to squeeze US$ 500 million in costs out of the business within four years.
The transaction creates “a much broader canvas” for cultivating brands and expanding them around the world, Polk said in the statement.
Jarden’s shares climbed in early Monday trading. The stock was already up 10 per cent this year, lifted by earlier reports that the Newell deal was underway. Newell was down on the news.
When the merger is completed, Newell stockholders will own 55 per cent of the combined company. It will build on Newell’s existing stable of brands, which includes Graco strollers, Sharpie pens, Rubbermaid and many others.
The transaction caps a 14- year run for Jarden chairman Martin E. Franklin, who used acquisitions to build the company’s vast array of brands. The current business traces its roots to 2000, when Franklin and longtime partner Ian Ashken tried and failed to acquire Alltrista Corp., a troubled manufacturer of plastics. After pushing for seats on the board, Franklin was named CEO and Ashken took the role of chief financial officer. That company became Jarden. Franklin and Ashken will both serve on the board of the combined company.
Jarden has been described as a publicly traded privateequity firm because of its penchant for buying brands and improving them. It has acquired about 30 companies since its founding in 2001, with the latest coming in October when it agreed to pay about US$1.5 billion for Visant Holding Corp., which owns the school- memorabilia maker Jostens.
Newell Rubbermaid, meanwhile, was formed when the company bought Rubbermaid Inc. for about US$ 6 billion in 1999. Newell and Jarden are looking to use the company’s new heft to attack markets such as baby products and kitchenware. The business will have annual adjusted earnings before i nterest, taxes, deprecation and amortization of more than US$ 3 billion once the cost savings are realized, according to the statement.