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Newell Rubbermaid buying Jarden in consumer products megadeal

Join Date: 2018-11-23

Photo by Newell Rubbermaid Inc. Newell Rubbermaid's Easy Find Lids system.

Two US giants in housewares and consumer products plan to combine forces in a multi-billion dollar deal that represents 16% of the $100bn (€91bn) a year global market in which they compete.

Newell Rubbermaid and Jarden Corporation announced that they would combine their businesses in a move that could save the pair a combined $500m (€454m) during the next four years.

Both companies are big plastics processors, producing goods such as food containers, office supplies, baby products and cutlery. They also consume large numbers of plastics components for diverse household goods such as writing instruments and small appliances.

Synergies should allow the combination to post earnings before interest, taxes, depreciation and amortisation of $3bn (€2.7bn) on annual sales of $16bn (€14.5bn).

The parties see the combination as complementary. There is little overlap of product lines and the companies sell through many common retail chains.

The firms predict increased exposure to fast-growing e-commerce channels and a higher profile in international markets. They will accelerate business plans and growth in key markets of food and beverage, baby products, commercial products, kitchenware and appliances.

“The scale of our combined businesses in key categories, channels and geographies creates a much broader canvas on which to leverage our advantaged set of brand development and commercial capabilities for accelerated growth and margin expansion,” noted Newell Rubbermaid president and chief executive Michael Polk in a statement.

“The combined scale of both businesses will create opportunities for shareholders, customers and employees as the two businesses are very complementary in vision and in their ability to execute,” said Jarden boss James Lillie.

Newell Rubbermaid agreed to a price that represents a 24% premium to Jarden’s share price for 30 days up to 11 December.

Jarden shareholders will receive for each Jarden share $21 in cash and 0.862 shares of Newell Rubbermaid for an implied price of about $60 a share.

The agreed-on purchase terms peg the value of the deal at about $15.4bn (€14.0bn), including Jarden’s convertible debt. Newell Rubbermaid shareholders will own 55% of the new company, to be called Newell Brands.

Each company has expanded sales and entered new markets through acquisitions and internal growth.

Newell Rubbermaid was formed in 1999 when Newell paid nearly $6bn (€5.4bn)) to take control of Rubbermaid.

Jarden significantly boosted its stake in plastics in summer when it bought Waddington Group, a major in food-service products, for $1.35bn (€1.23bn). Jarden’s recent organic growth includes the startup late last year of a new plastics moulding operation in Kentucky, to supply health care, precision consumer, recreation and closure markets.

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