As Newell sheds brands, a familiar foe circles
Former director Martin Franklin weighs bid for United States Playing Card Company
Newell Brands Inc., the struggling conglomerate that is unloading several of its household brands, could end up selling one of its oldest businesses, the maker of Bicycle playing cards, to a familiar foe.
Martin Franklin, a former Newell director who resigned and tried unsuccessfully to oust the company’s board earlier this year, is weighing a bid for the United States Playing Card Company, America’s largest playing-card maker, according to people familiar with the matter.
The 150-year-old business is expected to sell for more than $200 million, the people said. Mr. Franklin has expressed only preliminary interest and there are other potential bidders, mainly private-equity firms, the people said.
The business is one of several being sold by Newell to combat missed financial targets and weak sales that have caused its share price to fall by about half in the past year. Most of those assets were once part of Jarden Corp., a company Mr. Franklin created in 1993 and sold to Newell in 2016 before taking a seat on the Newell board.
In a statement Monday, Chief Executive Michael Polk said Newell still expects to generate $10 billion in after-tax proceeds from its divestitures and will use the money to pay down debt and buy back shares. The company has found buyers for three brands so far, yielding more than $2.5 billion. “We’re making significant progress,” Mr. Polk said.
Newell sold Rawlings Sporting Goods Company, Inc. for $395 million to Major League Baseball and investment firm Seidler Equity Partners. Carlyle Group-backed Novolex bought Waddington Group, a packaging manufacturer, for $2.3 billion. Goody Products Inc., Newell’s hair-products business, went to private-equity firm Acon Investments for an undisclosed amount.
Also on the market is Pure Fishing, Inc., which sells tackle, rods and reels under several brands such as Berkley and Abu Garcia. The business generates roughly $100 million in earnings before interest, taxes, depreciation and amortization, people familiar with the matter said. JPMorgan Chase & Co. is running the auction for the unit, which could sell for around $1 billion, they said.
The price Newell fetches for the businesses is becoming more critical, as the company struggles with weak sales, rising material costs and the lingering fallout from the bankruptcy of Toys “R” Us Inc., a major seller of Newell’s Graco baby products.
Newell has done well so far with asset sales, though it is unclear whether the win-streak will continue, said Joe Altobello, an analyst at Raymond James Financial, Inc.
“There’s still a lot of questions as to who the buyers are. And will the buyers pay” the prices Newell’s targeting, he said.
Several businesses for sale, including Jostens class rings and Rubbermaid containers—are in slow-growing markets, and prospective buyers are skeptical about whether the valuations Newell is seeking are justified, according to bankers and executives familiar with the companies. The brands are largely seen by private-equity firms as candidates for a turnaround.
U.S. Playing Card, which supplies casinos and owns the Bee and Tally-Ho brands, generates about $105 million of net sales, the people familiar with the matter said. Citigroup Inc. is providing advice for the business, they said. Its sales have been flat in recent years, but the business steadily generates cash, given that it dominates its market.
The saga at Newell has been a cautionary tale for other consumer-products companies. Newell cut the Jarden deal, believing the scale would help it compete, but the bigger company has struggled in a retail environment that has quickly become specialized and shifted online. The company attracted activist investors and subsequently overhauled the board earlier this year.
Newell faced pressure from two activist investors, Starboard Value LP and Carl Icahn, though their demands differed. Starboard wanted to replace the entire Newell board and Mr. Polk, while Mr. Icahn said he supported management but wanted Newell to consider selling more of its businesses. Mr. Franklin, the former director, was aligned with Starboard but cut ties after Mr. Polk was allowed to keep his job. Starboard has since trimmed its position, filings show. It now owns less than a 2% stake, while Mr. Icahn owns around 8%, according to FactSet. Cara Lombardo contributed to this article.