A Newell Rubbermaid is buying rival Jarden in a $15.4 billion cash-and-stock deal that creates a global consumer goods giant, the US companies announced Monday.
Newell Rubbermaid, maker of Rubbermaid storage containers, Sharpie pens and Calphalon cookware, said the combination of the two companies into the new Newell Brands would create a powerful portfolio of strong global brands with $16 billion in annual revenues.
Jarden's brands include Coleman tents, Yankee Candle candles, AeroBed inflatable mattresses, Crock-Pot cookers and Mr. Coffee coffeemakers.
"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," said Michael Polk, president and chief executive of Newell Rubbermaid, in a statement.
Newell Rubbermaid estimated the merger will yield about $500 million in cost synergies over four years, followed by "strong double-digit" earnings-per-share growth.
Under the terms of the deal, Jarden shareholders will receive for each share they own $21 in cash and 0.862 shares of Newell Rubbermaid. Based on the companies' share closing prices Friday, the acquisition offer represents a 24 percent premium to Jarden's 30-day weighted share price average.
Including Jarden convertible bonds in the deal, the total value of the takeover is $15.4 billion.
Polk will be CEO of Newell Brands and the new company's board of directors will have 13 members, including three representatives of the Jarden board.
The companies expect the transaction will close in the second quarter of 2016, dependent on shareholder and regulatory approvals.
Investors in Newell Rubbermaid sent shares tumbling 10.6 percent to $40.46 in early-afternoon trade in an overall choppy market. Jarden shares rose 0.7 percent to $53.04.
Briefing.com noted the deal was hardly a surprise for investors because of media reports last week that the two companies were in talks.
"The deal seems to make sense on both ends. Newell Rubbermaid adds some attractive brands in areas where they do not currently have a lot of exposure. And for Jarden, it's a nice premium," Briefing.com said in a research note.
Although US consumer spending has pulled back a bit recently, it said, the "longer term prognosis looks good" for the combined company.