BY Fraser Tennant
Consumer goods giants Newell Rubbermaid Inc. and Jarden Corporation have announced their intention to join forces to create a new $16bn company: Newell Brands.
Newell Rubbermaid, an S&P 500 company, is a global marketer of consumer and commercial products with 2014 sales of $5.7bn and a strong portfolio of leading brands. Jarden Corporation, a diversified, global consumer products company, has an extensive portfolio of over 120 trusted and authentic brands.
The combination of the two companies’ portfolios is expected to accelerate existing business plans in food & beverage, baby products, commercial products, kitchenware & appliances across large, growing and unconsolidated global markets that exceed $100bn.
Under the terms of the agreement, Jarden shareholders will receive $21 in cash for each Jarden share and 0.862 of a share in Newell Rubbermaid stock at closing. Once the transaction is complete, Newell Rubbermaid shareholders will own approximately 55 percent of the company.
Additionally, Newell Rubbermaid anticipates incremental annualised cost synergies of approximately $500m over four years, driven by efficiencies of scale and new efficiencies in procurement, cost to serve and infrastructure.
“The combination of these two great companies creates a $16bn consumer goods company with incredible potential to grow and create value,” said Michael B. Polk, current president and chief executive of Newell Rubbermaid, who will lead Newell Brands upon the closing of the transaction. “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.”
The transaction, expected to close in the second quarter of 2016, is subject to approval by shareholders of both Newell Rubbermaid and Jarden, receipt of regulatory approvals and other customary closing conditions.
“I am delighted that we are to play a part in bringing together these two winning companies," said Martin E. Franklin, executive chairman and founder of Jarden. “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.”
Eyeing the opportunities ahead, Mr Polk said: “I look forward to working with Martin as we drive the new Newell Brands towards its aspiration of becoming one of the preeminent consumer goods companies in the world.”