With almost all mergers, the rate of return is driven by the time it takes to finalize the transaction. In the case of the Jarden–Newell Rubbermaid merger, we have several conditions that must be met before the transaction can close.
Newell Rubbermaid (NWL) and Jarden (JAH) will have to get the joint proxy statement approved by the Securities and Exchange Commission (or SEC). If the SEC makes any comments, the companies will need to fix the language and refile. Once the SEC approves the proxy statement, a vote must be scheduled at least 30 days from the mailing date.
Newell Rubbermaid will need to file for merger approval under the Hart-Scott-Rodino Antitrust Improvements Act. The companies reference other regulatory approvals in the press release, however these are not publicly disclosed. The most likely additional approval would be with the European Union.
Professional arbitrageurs will usually go to the respective Form 10-Ks for the companies to get a read on antitrust and to see if the companies name each other as competitors. Neither company names the other as a competitor, and it doesn’t look like any of the brands compete with each other, unless you consider Ball jars to be a direct competitor to Rubbermaid’s food storage products. This deal looks like an early termination candidate, meaning that the approval of the joint proxy statement is likely to be the gating item.
Best efforts language
The companies will use “commercially reasonable” efforts to get regulatory approval and contest any findings by the antitrust authorities. The companies are not required to make any divestitures that would have materially adverse effect on the net benefits (including synergies) of the transaction.
Other merger arbitrage resources
Other important merger spreads include the Cigna (CI) and Anthem (ANTM) deal, slated to close in 2H15. For a primer on risk arbitrage investing, you can read “Merger arbitrage must-knows: A key guide for investors.”
Investors who are interested in trading in the consumer discretionary sector should look at the Vanguard Consumer Discretionary ETF (VCR).