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Newell Back on Acquisition Spree, to Buy Sistema & Woodwick
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Newell Brands Inc. (NWL - Free Report) is in the limelight once again. This consumer goods behemoth, which concluded Jarden Corp.’s buyout in April this year, is back on an acquisition spree. In an attempt to solidify its portfolio further, the company inked a couple of deals to acquire Sistema Plastics for approximately NZ$660 million (US$470 million), and Smith Mountain Industries for roughly $100 million.
While the New Zealand – based Sistema Plastics offers exclusive food storage containers, Smith Mountain Industries is a leading provider of superior home fragrance goods, which mainly operates through its WoodWick Candle brand. Newell stated that it anticipates closing these buyouts by the second and first quarters of 2017, respectively.
Notably, Sistema Plastics generates annual sales of about $145 million, and is one of the fastest-growing names in the Food Storage space. Further, Sistema’s strong global network and presence in regions where Newell doesn’t currently operate, is likely to improve Newell’s geographic reach.
WoodWick Candle is another fast growing brand in its own category, with annual sales of around $65 million. The buyout of this unique scented candles brand is likely to be an appropriate fit for Newell’s Home Fragrance space, as it will complement the latter’s Yankee Candle brand, part of Jarden’s portfolio.
Clearly, the twin buyout will enhance Newell’s leadership footprint in three most significant categories, also termed as the Win Bigger categories that include Beverage, Home Fragrance and Food Storage. Notably, both Sistema Plastics and WoodWick Candle are currently growing at rates which clearly surpasses Newell’s core sales growth rate. Also, the acquisition of these businesses is anticipated to augment Newell’s normalized earnings with immediate effect.
Newell has been committed toward growing its higher-margin businesses. These acquisitions are part of the company’s portfolio reorganization plan, which aims to transform Newell from a holding company into an operating company with fresh investment plans and new ideas for its combined portfolio with Jarden.
In this regard, the company announced plans of sell nearly 10% of its current portfolio, including a major chunk of its Tools segment and thereafter, aligning its resources to more profitable areas like Writing; Home Fragrance; Baby, Food Storage & Preparation; Appliances & Cookware; and Outdoor & Recreation. This in turn is likely to shape the company for a better future with stronger prospects.
Progressing on these lines, Newell already inked a deal to sell its Irwin, Lenox and Hilmor brands of the Tools segment, to Stanley Black & Decker, Inc. (SWK - Free Report) , which is anticipated to close in the first quarter of 2017. With that being taken care of, the company is back to its acquisition track, with the aforementioned announcements marking its first set of buyouts since its merger with Jarden.
Finally, the company announced that it plans to fund these purchases with cash on hand only, and has no intentions to touch proceeds from the divestitures of its held for sale units. This is because it plans to utilize the divestiture proceeds to free up the company’s debt, and thus remain committed to achieving its leverage ratio target of 3−3.5 times EBITDA, by the end of 2018.
All said, Newell has once again testified to its practice of sharpening focus on creating a faster growing, higher margin and more profitable company. Closing trade at $46.48 on the last trading day, this Zacks Rank #3 (Hold) stock jumped 2.1% yesterday. In fact, the company’s shares have jumped 5.4% on a year-to-date basis, against the Zacks categorized Consumer Products – Miscellaneous Staples industry’s downside of 3.8%.
Ollie's Bargain has to its credit a spectacular earnings trend as the company delivered a positive earnings surprise over the past four quarters. Moreover, its long-term EPS growth rate of 20.6% and positive estimate revisions over the past 7 days help it stand strong against the industry.
Blue Buffalo, with a long-term EPS growth rate of 14% has seen positive estimate revisions for 2016, over the past 30 days. The company also flaunts a solid earnings surprise history.
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Newell Back on Acquisition Spree, to Buy Sistema & Woodwick
Newell Brands Inc. (NWL - Free Report) is in the limelight once again. This consumer goods behemoth, which concluded Jarden Corp.’s buyout in April this year, is back on an acquisition spree. In an attempt to solidify its portfolio further, the company inked a couple of deals to acquire Sistema Plastics for approximately NZ$660 million (US$470 million), and Smith Mountain Industries for roughly $100 million.
While the New Zealand – based Sistema Plastics offers exclusive food storage containers, Smith Mountain Industries is a leading provider of superior home fragrance goods, which mainly operates through its WoodWick Candle brand. Newell stated that it anticipates closing these buyouts by the second and first quarters of 2017, respectively.
Notably, Sistema Plastics generates annual sales of about $145 million, and is one of the fastest-growing names in the Food Storage space. Further, Sistema’s strong global network and presence in regions where Newell doesn’t currently operate, is likely to improve Newell’s geographic reach.
WoodWick Candle is another fast growing brand in its own category, with annual sales of around $65 million. The buyout of this unique scented candles brand is likely to be an appropriate fit for Newell’s Home Fragrance space, as it will complement the latter’s Yankee Candle brand, part of Jarden’s portfolio.
Clearly, the twin buyout will enhance Newell’s leadership footprint in three most significant categories, also termed as the Win Bigger categories that include Beverage, Home Fragrance and Food Storage. Notably, both Sistema Plastics and WoodWick Candle are currently growing at rates which clearly surpasses Newell’s core sales growth rate. Also, the acquisition of these businesses is anticipated to augment Newell’s normalized earnings with immediate effect.
Newell has been committed toward growing its higher-margin businesses. These acquisitions are part of the company’s portfolio reorganization plan, which aims to transform Newell from a holding company into an operating company with fresh investment plans and new ideas for its combined portfolio with Jarden.
In this regard, the company announced plans of sell nearly 10% of its current portfolio, including a major chunk of its Tools segment and thereafter, aligning its resources to more profitable areas like Writing; Home Fragrance; Baby, Food Storage & Preparation; Appliances & Cookware; and Outdoor & Recreation. This in turn is likely to shape the company for a better future with stronger prospects.
Progressing on these lines, Newell already inked a deal to sell its Irwin, Lenox and Hilmor brands of the Tools segment, to Stanley Black & Decker, Inc. (SWK - Free Report) , which is anticipated to close in the first quarter of 2017. With that being taken care of, the company is back to its acquisition track, with the aforementioned announcements marking its first set of buyouts since its merger with Jarden.
Finally, the company announced that it plans to fund these purchases with cash on hand only, and has no intentions to touch proceeds from the divestitures of its held for sale units. This is because it plans to utilize the divestiture proceeds to free up the company’s debt, and thus remain committed to achieving its leverage ratio target of 3−3.5 times EBITDA, by the end of 2018.
All said, Newell has once again testified to its practice of sharpening focus on creating a faster growing, higher margin and more profitable company. Closing trade at $46.48 on the last trading day, this Zacks Rank #3 (Hold) stock jumped 2.1% yesterday. In fact, the company’s shares have jumped 5.4% on a year-to-date basis, against the Zacks categorized Consumer Products – Miscellaneous Staples industry’s downside of 3.8%.
Stocks to Consider
Some better-ranked stocks in the same industry include Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) , with a Zacks Rank #1 (Strong Buy) and Blue Buffalo Pet Products, Inc. (BUFF) , with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ollie's Bargain has to its credit a spectacular earnings trend as the company delivered a positive earnings surprise over the past four quarters. Moreover, its long-term EPS growth rate of 20.6% and positive estimate revisions over the past 7 days help it stand strong against the industry.
Blue Buffalo, with a long-term EPS growth rate of 14% has seen positive estimate revisions for 2016, over the past 30 days. The company also flaunts a solid earnings surprise history.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>