A look at the deal economics
As discussed earlier, Newell Rubbermaid (NWL) has agreed to buy Jarden (JAH) for $15.4 billion. The company is paying more than 23 times Jarden’s trailing-12-month EBITDA (earnings before interest, tax, depreciation, and amortization) and has agreed to take on $4.8 billion of Jarden’s net debt.
The total deal value to Jarden’s revenue is 2.1x, while the total equity value to its market capitalization is 1.3x as of December 14, 2015.
Comparing the proposed Newell-Jarden deal with previous transactions in the sector, the valuation of the current deal in terms of total deal value to EBITDA is on the higher side of the spectrum.
In the past, companies have typically paid in the range of 5–17 times EBITDA for their targets.
Financing of the deal
As announced by Michael B. Polk, chief executive officer of Newell Rubbermaid, Newell Rubbermaid will finance the transaction with a combination of $5 billion in new debt and the issuance of approximately 221 million new shares. Newell has secured bridge financing of $10.5 billion for the transaction and expects to raise fresh debt before the transaction closes.
Goldman Sachs served as the lead financial advisor to Newell Rubbermaid and is providing committed financing for the transaction. Centerview Partners acted as the financial advisor to Newell Rubbermaid’s board of directors. Barclays acted as the lead financial advisor for Jarden, and UBS Investment Bank also acted as a financial advisor for Jarden.
Newell Rubbermaid and its target Jarden are a part of the PowerShares DWA Consumer Staples Momentum ETF (PSL), with respective weights of ~2.7% and ~4.4%.