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Newell (NWL) Divests Tools Business to Enhance Portfolio
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In sync with its Growth Game Plan to simplify and enhance portfolio, Newell Brands Inc. (NWL - Free Report) recently divested its Tools operations to Stanley Black & Decker, Inc. (SWK - Free Report) , an industrial tool maker. This transaction, which realized nearly $1.95 billion, including the retention of accounts receivable, was first announced in Oct 2016.
As part of the deal, Newell sold the Irwin, Lenox and Hilmor brands of its Tools business. Furthermore, management at Newell believes that its Tools business is likely to benefit more by being part of Stanley Black & Decker, which is one of the international leaders in that space. However, the company decided to retain its Dymo Industrial labeling business (of the Tools segment) within its portfolio.
The proceeds from this transaction will mainly be utilized in reducing the company’s debt. This, in turn, will take Newell closer to its leverage ratio target of 3−3.5 times EBITDA in two to three years from Jarden’s buyout that was concluded in Apr 2016.
Further, the divestiture forms part of Newell’s new Growth Game Plan of transforming into an operating company from a holding company, along with fresh investment plans and new ideas for its combined portfolio with Jarden. Accordingly, Newell had announced plans to make its operating structure simpler, by reducing its 32 business units to 16 operating divisions. Additionally, this will include the establishment of an all-new e-commerce unit that operates internationally.
Apart from the aforesaid divestiture, Newell had unveiled plans to divest many other businesses too, which includes the Outdoor Solutions Segment’s Winter Sports businesses; the Heaters, Humidifiers, and Fans operations within the Consumer Solutions Segment and the Home Solutions Segment’s Consumer Storage Container unit.
In fact, in this regard, the company recently agreed to sell the Rubbermaid consumer storage totes business and also put up a couple of businesses, including the Pine Mountain and part of Diamond brands, for sale. Notably, the company is on track with its plan of exiting product lines with annual sales in the range of $200−$300 million across its combined business with Jarden, over the next two to three years.
Clearly, these changes reflect the company’s focus on simplifying its operating structure, alongside highlighting its commitment toward making prudent investments in areas with higher growth potential.
Moving ahead, we believe that the sale of the company’s Tools business brands is a win-win for both Newell and Stanley Black & Decker. On one hand, the deal is likely to aid Newell in better allocating its resources, along with enhancement of its business structure and improvement in market share. On the other hand, Stanley Black & Decker is expected to fortify its worldwide footprint in the tools industry.
We noted that shares of Newell have outperformed the Zacks categorized Consumer Products – Miscellaneous Staples industry in the past one year. While this Zacks Rank #3 (Hold) stock yielded nearly 17%, the industry gained 2.8% over the same time frame.
Blue Buffalo Pet Products has a long-term earnings growth rate of 14%. Further, it has posted an average beat of 6.8% in the trailing four quarters.
Energizer Holdings, with a long-term earnings growth rate of 9.5%, has surged 36.7% in the past one year.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
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Newell (NWL) Divests Tools Business to Enhance Portfolio
In sync with its Growth Game Plan to simplify and enhance portfolio, Newell Brands Inc. (NWL - Free Report) recently divested its Tools operations to Stanley Black & Decker, Inc. (SWK - Free Report) , an industrial tool maker. This transaction, which realized nearly $1.95 billion, including the retention of accounts receivable, was first announced in Oct 2016.
As part of the deal, Newell sold the Irwin, Lenox and Hilmor brands of its Tools business. Furthermore, management at Newell believes that its Tools business is likely to benefit more by being part of Stanley Black & Decker, which is one of the international leaders in that space. However, the company decided to retain its Dymo Industrial labeling business (of the Tools segment) within its portfolio.
The proceeds from this transaction will mainly be utilized in reducing the company’s debt. This, in turn, will take Newell closer to its leverage ratio target of 3−3.5 times EBITDA in two to three years from Jarden’s buyout that was concluded in Apr 2016.
Further, the divestiture forms part of Newell’s new Growth Game Plan of transforming into an operating company from a holding company, along with fresh investment plans and new ideas for its combined portfolio with Jarden. Accordingly, Newell had announced plans to make its operating structure simpler, by reducing its 32 business units to 16 operating divisions. Additionally, this will include the establishment of an all-new e-commerce unit that operates internationally.
Apart from the aforesaid divestiture, Newell had unveiled plans to divest many other businesses too, which includes the Outdoor Solutions Segment’s Winter Sports businesses; the Heaters, Humidifiers, and Fans operations within the Consumer Solutions Segment and the Home Solutions Segment’s Consumer Storage Container unit.
In fact, in this regard, the company recently agreed to sell the Rubbermaid consumer storage totes business and also put up a couple of businesses, including the Pine Mountain and part of Diamond brands, for sale. Notably, the company is on track with its plan of exiting product lines with annual sales in the range of $200−$300 million across its combined business with Jarden, over the next two to three years.
Clearly, these changes reflect the company’s focus on simplifying its operating structure, alongside highlighting its commitment toward making prudent investments in areas with higher growth potential.
Moving ahead, we believe that the sale of the company’s Tools business brands is a win-win for both Newell and Stanley Black & Decker. On one hand, the deal is likely to aid Newell in better allocating its resources, along with enhancement of its business structure and improvement in market share. On the other hand, Stanley Black & Decker is expected to fortify its worldwide footprint in the tools industry.
We noted that shares of Newell have outperformed the Zacks categorized Consumer Products – Miscellaneous Staples industry in the past one year. While this Zacks Rank #3 (Hold) stock yielded nearly 17%, the industry gained 2.8% over the same time frame.
Key Picks
Better-ranked stocks in the same industry include Blue Buffalo Pet Products, Inc. (BUFF - Free Report) and Energizer Holdings, Inc. (ENR - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Blue Buffalo Pet Products has a long-term earnings growth rate of 14%. Further, it has posted an average beat of 6.8% in the trailing four quarters.
Energizer Holdings, with a long-term earnings growth rate of 9.5%, has surged 36.7% in the past one year.
Zacks' 2017 IPO Watch List
Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.
One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>