Jarden Shrinking Itself To Growth (JAH)

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Jarden Corporation (NYSE: JAH) just keeps on with its forward momentum.  The consumer products company is in an interesting position because its is being cheered for a share buyback that will lead to it suspending its dividend. Jarden makes and sells consumer product brands such as Coleman, K2, Rawlings, Mr. Coffee, Penn, Crock-Pot, Sunbeam, and many others. 

The company put its fourth quarter sales above the consensus analyst expectations in a range of $1.725 billion and $1.735 billion, but the real cheer is that the company is conducting a tender offer to repurchase $500 million in shares of common stock.  This $500 million compares to a market cap of about $3 billion and that is after a 9% gain today.

It was given little attention, but Jarden expects to recognize non-cash charges against $50 to $55 million in earnings so it can write down intangible assets and to cover reorganization and other items.

What makes this so unique is that the company’s cash on hand is being used along with borrowings in a share tender between $30 and $33 per share.

In a rare move, the company is also suspending its dividend after the next dividend payment.  It called the dividend versus the buyback as “the accelerated stock buy back offers better value to our stockholders.”

Jarden shares are up 9% at $33.49 and its 52-week trading range is $25.60 to $37.50.  Without considering the effects of the lower share count after a tender ahead, the stock trades at less than 10-times expected earnings.

JON C. OGG