US consumer goods major Newell Rubbermaid acquires rival Jarden for $15 bn

Leading US consumer goods maker Newell Rubbermaid Inc yesterday struck a deal to merge with rival Jarden Corp in a cash-and-stock deal valued at approximately $15 billion, marking a sign of consolidation in the global consumer goods market.

The combined entity, to be renamed Newell Brands, will create a $16-billion consumer goods company with a strong portfolio of leading brands such as Paper Mate, Sharpie, Parker, Lenox, Yankee Candle, Abu Garcia, K2 and others in a large, growing and unconsolidated market for consumer goods.

Under the terms of the deal, Jarden shareholders will receive $21 in cash and 0.862 shares of Newell for each share they own, which will amount to around $60 per share with a total valuation of $13.2 billion, the companies said in a statement.

The offer represents a 24-per cent premium to Jarden's 30-day average stock price as of 11 December.

Further to the announcement of the deal, shares in Newell Rubbermaid fell 7 per cent to $42.15 yesterday in New York, while Jarden stock moved up 2.7 per cent to close at $54.08.

Including the possible interest of convertible debenture holders, the transaction is worth over $15 billion. 

Upon closing, Newell shareholders will own approximately 55 per cent of the combined entity, while the remaining 45-per cent will be held by Jarden shareholders.

The merger, which is expected to be accretive to Newell's earnings, will result in cost synergies of around $500 million in four years, the statement said.

Newell Rubbermaid's chief executive officer Michael Polk said, ''The combination of these two great companies creates a $16-billion consumer goods company with incredible potential to grow and create value.''

''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,'' he added.

Florida-based Jarden, founded in 2001, has grown through acquisitions and it is one of the largest diversified makers of consumer products from matches to electric appliances and sports gear.

The company owns a large portfolio of over 120 brands. Its diverse range of branded consumables include Ball, Bee, Billy Boy, Bicycle, Crawford, Hoyle, Jostens, Kerr, Sunbeam, Yankee Candle and Outdoor range comprising fishing, sporting, camping goods under brands Abu Garcia, Coleman, K2 and Rawlings, among others.

Jarden's revenue last year was $8.3 billion and its net income was $242 million. It has around 35,000 employees.

Atlanta-headquartered Newell Rubbermaid's leading brands include Sharpie, Paper Mate, Parker, Lenox, Elmers, Rubber Maid and others. In 2014, the company reported revenue of $5.7 billion and profit of $378 million.

''The two businesses are very complementary in vision and in their ability to execute,'' James Lillie, chief executive officer of Jarden commented.

Newell Rubbermaid intends to fund the acquisition using a combination of cash on hand, debt and equity.

The transaction is expected to close in the second quarter of 2016 subject to shareholders' and regulatory approvals, and other customary closing conditions.

Upon closing, Newell Rubbermaid's Michael Polk will become the chief executive of the new Newell Brands.

Jarden's three directors including its founder and executive chairman Martin Franklin will join the new 13-member board, which will be chaired by Newell Rubbermaid non-executive chairman Michael Cowhig.

Goldman Sachs & Co served as lead financial advisor to Newell Rubbermaid, while Barclays acted as lead financial advisor for Jarden in respect of the transaction.