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Meet the Players Behind the Latest Gargantuan Consumer Products Buyout

By Motley Fool Staff - Dec 21, 2015 at 6:07PM

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We look at the history of two companies and how they expanded with one buyout after another.

While you may not recognize the name Jarden (NYSE: JAH), or the Newell part of Newell Rubbermaid (NWL 1.79%), you know the brands they've acquired over the decades -- Yankee Candle, Marmot, Graco, and Sharpie, to name only a few. In this clip, Sean O'Reilly and Vincent Shen give some background on these two highly acquisitive companies, their performance since the financial crisis, and how they've come to where they are today.

A full transcript follows the video.

 

This podcast was recorded on Dec. 15, 2015.

Sean O'Reilly: Big news this week. Newell Rubbermaid offered to buy Jarden for $15 billion -- 15 followed by nine zeros. Real quick for listeners who may not be aware of these brands -- can you provide us, one, with a history of the company, and two, paint a brief picture of their recent performance?

Vincent Shen: Yeah. So we've had some pretty acquisitive shows recently. We talked about the Keurig deal recently...

O'Reilly: I'm sorry to interrupt. You know what I think? I think the Federal Reserve is about to raise interest rates a little bit, so everybody's like, "Oh crap, debt's about to go up, we need to buy stuff." That's my theory.

Shen: That's an ongoing trend. This has been a really big year overall for M&A deals. As a result, we've had an opportunity to talk about some of these really nice size buyouts and mergers like this one. So this most recent one, as you mentioned, is between Newell Rubbermaid and Jarden. So to give you a little bit of history, because I think it's very interesting how these companies have approached and grown into the businesses they are today.

Martin Franklin, founder of Jarden, a pretty young company, founded in 2001. He served as the CEO for about a decade, and in that time, amassed a pretty formidable portfolio of consumer brands. So some of the ones that I saw when I was looking through the list that really stood out to me are classics like Bicycle, the playing cards...

O'Reilly: Oh my gosh, they own Bicycle.

Shen: Yankee Candle, Coleman outdoor products, Marmot outdoor products. And just to give you an idea of how acquisitive this company has been, just in October, Jarden announced that they would be acquiring Jostens for $1.5 billion, Jostens being the provider of class rings and yearbooks for schools.

O'Reilly: Taking me back to high school, Vince.

Shen: And now, Franklin has taken this company, and its umbrella includes over 120 brands.

O'Reilly: Did you know it was this big? My eyebrows are popping here.

Shen: I had no idea; but when I was looking through all these logos and the brands in their website, I was really surprised, like, "Wow, I recognize quite a few of these." I didn't know it was all under this umbrella.

O'Reilly: So, is this Franklin just cashing out?

Shen: I'll get to that, and he's cashing out quite nicely, actually. So Newell Rubbermaid has a bit of a longer history. It started in 1903 in New York when Edgar Newell purchased a company that was in default, and renamed it. 

So he obviously started building out that business. But it was in 1965 or so when the company began its own run of acquisitions. They tout that they've done over 70 of those over the past 30 years as they were seeking growth for the company. Some of the big names in that portfolio include Lenox, Sharpie, Parker, Calphalon. In 1999, they purchased Rubbermaid for about $6 billion -- hence, the name now. And again, like Jarden, very recently, Newell Rubbermaid had recently acquired Elmer's for $600 million in October.

O'Reilly: Taking me back to second grade.

Shen: So really big household names that they have in their portfolio.

O'Reilly: Definitely not just a plastic-container company, for sure.

Shen: Exactly. So beyond what Rubbermaid's known for... so in terms of the performance of these companies, their stocks recently, they've done very well, both of them have done very well since the financial crisis. Jarden's up nearly 300% over the past five years.

During that same period, top and bottom lines have grown at about a 10% CAGR. So nice healthy growth. And Newell Rubbermaid itself has had choppy results, but it's also up about 140%. These are easily surpassing the broad mark in the S&P 500 results, but it's also up about 140%. These are easily surpassing the broad mark in the S&P 500.

Sean O'Reilly has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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