Newell Rubbermaid makes $15bn bid for rival Jarden
14 December 2015
- From the section Business
Consumer products company Newell Rubbermaid said it would buy competitor Jarden, the owner of brands including Breville and Sunbeam, for $15.4bn (£10bn).
The combined business is expected to generate $16bn in annual revenue.
Newell Rubbermaid chief executive Michael Polk said the purchase created “incredible potential to grow and create value”.
The deal should create savings of $500m in the first four years.
Shares of Newell Rubbermaid, which owns dozens of consumer brands including Parker and Sharpie pens and Rubbermaid cleaning products, fell 7%.
Jarden shares closed up 2.7% following the announcement on Monday.
Mr Polk said the deal would be financed by issuing about $5bn in new debt and 221m new shares.
Concerns over the levels of debt that the combined company, to be called Newell Brands, will take on is one reason why the shares fell.
Analysts also pointed to disappointment that Martin Franklin, founder and executive chairman of Jarden, will not have an executive role in the new company.
Neil Saunders, chief executive of research firm Conlumino, said the deal would make it easier to fend off retailers’ demands for price cuts.
Wal-Mart, which provides nearly 13% of Newell Rubbermaid’s revenue. has asked some suppliers to reduce prices this year.
In recent years Newell Rubbermaid has grown by making a series of acquisitions.
In October it bought adhesives maker Elmer’s and last December acquired Baby Jogger, a maker of sporty prams.
The deal is expected to close in the second quarter of 2016 if it wins the approval of shareholders in both companies .
This post was written by FSB News