Global consumer goods marketer Newell Rubbermaid Inc. (NWL) announced that it has penned a deal to acquire bubba brands inc. from its parent company In Zone Holdings Inc. for an undisclosed amount. The deal which is anticipated to close by the end of October will be financed by the company’s organic cash flow and available borrowings.
bubba is a leader in the designing and marketing of long lasting beverage containers. The company has an impressive track record in the hydration and thermal market, in terms of growth. Newell expects the brands’ sales to touch $50 million in 2014.
The deal also perfectly fits Newell’s Growth Game Plan as bubba’s operations are focused on product performance, design and sustained innovations. Moreover, Newell intends to leverage bubba’s current robust momentum to enhance its distribution network, product expansion and geographic presence.
Furthermore, the recent acquisition will help Newell in strengthening its position in the fastest growing consumer durable category in the North American region. The company made its entry in the beverage container category in the third quarter by acquiring Ignite Holdings, LLC ("Ignite") from private equity firm North Castle Partners, for a total price of $308.0 million. Newell believes that Ignite will generate sales of about $125 million in 2014.
The proposed acquisitions of bubba and Ignite are likely to augment Newell’s growth rate, its normalized earnings per share as well as its normalized operating income margin within the first year of the deal.
Newell currently carries a Zacks Rank #3 (Hold). Other players in the retail industry, which look attractive at current levels, include Citi Trends Inc. (CTRN), Express, Inc. (EXPR) and Christopher & Banks Corp. (CBK), each carrying a Zacks Rank #1 (Strong Buy).
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