Newell Rubbermaid Inc. (NYSE: NWL) and Jarden Corp. (NYSE: JAH) made huge moves in the markets in terms of volatility on news of a merger, but investors don’t seem overly thrilled. Both companies announced that they have entered into a definitive agreement to combine. The transaction creates a $16 billion consumer goods company to be named Newell Brands. This transaction is still subject to shareholder approval.
The scaled enterprise is expected to accelerate profitable growth with leading brands that compete in a global market that exceeds $100 billion, with business and capability development supported by the efficiencies of this transformational combination.
If we glanced at the combined product portfolio we would see the likes of Paper Mate, Sharpie, EXPO, Parker, Rubbermaid, Lenox, Rubbermaid Commercial Products and Coleman, just to name a few.
Under the terms of the agreement, Jarden shareholders will receive, for each Jarden share, $21 in cash and 0.862 shares of Newell Rubbermaid stock at closing.
Newell Rubbermaid anticipates incremental annualized cost synergies of approximately $500 million over four years, driven by efficiencies of scale and new efficiencies in procurement, cost to serve and infrastructure that the combination unlocks.
Michael B. Polk, Newell Rubbermaid’s president and chief executive, commented:
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.
Martin E. Franklin, executive chairman and founder of Jarden, added:
I am delighted that we are to play a part in bringing together these two winning companies. The combination offers significant value for our shareholders and the opportunity to participate in the combined company’s long-term value creation potential as shareholders in Newell Brands. I’m extremely proud of Jarden’s success over the past 14 years, which has been driven by an extraordinary culture designed to perform at a high level. We have spent significant time with Newell Rubbermaid’s senior management team and are convinced they have a similar ambition and drive. I’m excited by the opportunities for this new combined organization and I look forward to being part of this dynamic new chapter.
Jarden shares were trading up 0.6% at $52.98 Monday, with a consensus analyst price target of $59.88 and a 52-week trading range of $43.19 to $57.09.
Shares of Newell Rubbermaid were trading down 10.5% at $40.51, with a consensus price target of $48.00 and a 52-week range of $34.44 to $50.90.