Two Acquisitive Companies Tie as Newell Rubbermaid Buys Jarden
The merger is driven by synergies and scale
Both Newell Rubbermaid (NWL) and Jarden (JAH) are consumer discretionary companies that grew by acquisition. They both have portfolios of brands that are pretty much independent of each other. Newell Rubbermaid is known mainly for its Rubbermaid products, along with writing brands like Sharpie and Papermate. Jarden is known for Yankee Candle, Coleman camping gear, and Marmot clothing. The complementary portfolios are especially expected to accelerate growth in Food & Beverage, Baby Products, Commercial Products, as well as Kitchenware & Appliances. The combined company will have about $16 billion in annual revenues.
Expected synergies and pro forma financials
The companies anticipate that the merger will deliver $500 million in annual synergies over four years. The Jarden–Newell Rubbermaid merger is expected to be immediately accretive to earnings. Post-synergies, they anticipate approximately $3 billion in annualized EBITDA (earnings before interest, taxes, depreciation, and amortization) and EBITDA margins of 20%. Synergies are expected to be realized in distribution, elimination of overlapping corporate functions, and cross-selling opportunities.
Other resources
Other important merger spreads include the Cigna (CI) and Anthem (ANTM) deal that’s slated to close in 2H15. For a primer on risk arbitrage investing, read “Merger arbitrage must-knows: A key guide for investors.”
Investors who are interested in trading in the consumer discretionary sector could look at the Vanguard Consumer Discretionary ETF (VCR).
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