Jarden to Pay $745.6 Million
To Acquire American Household
By DENNIS K. BERMAN and HENNY SENDER
Staff Reporters of THE WALL STREET JOURNAL
September 20, 2004; Page A6
In a deal uniting the maker of Diamond matches and Bicycle playing cards with
the producer of Sunbeam appliances and Mr. Coffee coffee makers, Jarden
Corp. said Monday it will purchase American Household Inc. for $745.6 million.
Jarden has quietly amassed a portfolio of slow-growing consumer items,
including toothpicks and twine, plastic bottle closures and bicycle storage hooks.
This acquisition will be by far its largest to date.
Closely held American Household, the successor company to the fallen
Sunbeam Corp., has about $1.7 billion in annual sales, about twice that of
Jarden, which is based in Rye, N.Y.
To help finance the acquisition, Jarden is working with private-equity firm
Warburg Pincus LLC, which will invest $350 million of equity into Jarden.
American Household has debt outstanding of about $130 million, which Jarden
Jarden shares were up 85 cents, or 2.5%, at $35.25 Friday in 4 p.m. New York
Stock Exchange composite trading, after rising more than 36% during the past
With a market capitalization of just under $1 billion, Jarden remains a small
competitor to the likes of consumer-products titans such as Procter & Gamble
Co., which has annual sales of $143 billion, and Colgate-Palmolive Co., which
has sales of $29 billion.
But by adding American Household, Jarden Chairman and Chief Executive
Martin Franklin is betting he can gain more clout with retailers, all the while
extending American Household's brand names across existing Jarden products
and distributing American Household's products deeper into retailers where
Jarden already has a presence.
Mr. Franklin will have a roster of well-known brands to work with, including
Coleman camping products, First Alert home-security products and Oster home
appliances. Upon closing the deal, Jarden will maintain the top or No. 2 position
in such niche categories as electric blankets, home canning and professional
The deal is the latest twist in a long corporate drama at the old Sunbeam Corp.,
which is best known for having filed for Chapter 11 bankruptcy protection after
the failed tenure of chief executive Albert J. Dunlap, known as "Chain-Saw Al."
Two years ago, the flamboyant executive settled accounting-fraud charges with
the Securities and Exchange Commission and accepted a ban on holding
executive posts in public companies. Meanwhile, Sunbeam reorganized into a
private company whose creditor banks were its leading shareholders.
People close to the transaction say the deal will immediately add to Jarden's
earnings, excluding one-time acquisition and restructuring charges. The
combined company will employ about 9,000.
One of the reasons Mr. Franklin turned to Warburg Pincus was because he didn't
want to upset his ratio of debt to equity, according to people familiar with the
While many buyout firms have recently gone on a buying binge, trading unlisted
companies extensively with each other, Warburg Pincus has been more
prepared than many of its rivals to invest in public companies, whether as the
controlling shareholder or as a minority shareholder, as with Jarden.
"We have always been interested in helping companies pull something off
involving real scale by giving them financing and more-stable balance sheets, if
we see the prospect of more growth and value," Chip Kaye, the co-chairman of
Warburg Pincus, said in a recent interview
In addition, most recent deals have involved auctions with investment bankers
offering the target company to a large number of potential financial buyers. But in
this case, the deal grew out of the close relations between Mr. Kaye and Mr.
Franklin, people close to the transaction say.