Newell Brands, a wounded giant

Newell Brands, a wounded giant

by Pininvest Analysis

Kitchen Home & Garden on pininvest.com

  • 16 constituents
  • 17.3% 1y performance
  • 47.2% volatility
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Newell is a conglomerate described as a “worldwide marketer of consumer and commercial products” by Wikipedia

The company has grown quickly with a serial acquisition policy since the early ‘80s, focused on brands which remain core to its mission statement

‘Our brands live at the heart of life — where the moments that matter the most happen — where you live, learn, work and play’

After a number of smaller acquisition through the ‘90s, the company made a transformative move, buying famed Rubbermaid in 1999, nearly doubling the size of Newell in the process in a merger that turned out harrowing for its shareholders (with a 50% of their value within 2 years and a $500m goodwill write-off in 2002)

Through the 2000’s, Newell stuck to its business model with numerous, albeit smaller, acquisitions – retaining the brand names, reorganizing and reassigning production units, both in the US and overseas

By late 2015, and at a $12.5bn market cap at the time, Newell choose – as the opportunity arose – to merge with a company which shared essentially its business model, Jarden (market cap $11.5bn), in a $15bn deal

Jarden, originally spun-off from Ball as a home-canning glassware producer in 1993, started on the acquisition trail in the 2000’s under the impulse of Martin Franklin and transformed itself in a consumer products conglomerate with sales of $8.6bn for 2015, the last year as an independent company

With both companies committed to ‘brand centric’ market approaches and mostly complementary between home specialties, writing products, baby articles and outdoors, expectations in 2015 were reasonably high, notwithstanding the complexity of a 100 brands portfolio …

This assumption was widely off the mark and Newell lost close to 40% share value in these short 2 years

In our follow-up note, we will try to outline what lays ahead for investors - and for the company