Moving ahead with its portfolio enhancement strategy, Newell Rubbermaid Inc. (NWL) inked a deal to buy Baby Jogger Holdings, Inc. from a global private equity organization, The Riverside Company, for a total price of nearly $210 million.
The deal, which is anticipated to conclude by the end of the final quarter of 2014, is likely to be sponsored via organic cash flows and available loans.
Baby Jogger’s business is concentrated on designing and marketing branded infant and juvenile products, mainly superior-quality activity strollers and associated accessories. This baby products company has set a great record by designing award-winning products which have been helpful for active parents. The company caters to nearly 70 countries worldwide, which highlights its strong recognition.
With its highly popular stroller brands like City Select(R), City Mini(R) and other sub-brands, it will form part of Newell’s Baby and Parenting segment, being a perfect fit for Newell’s Graco(R) and Aprica(R) businesses.
Further, Baby Jogger, which is expected to generate net sales worth roughly $90 million in 2014, is expected to augment Newell’s normalized earnings per share (EPS) and growth rate in the first year of being acquired. Hence, we believe that the acquisition of Baby Jogger will prove to be an apt strategic long-term plan for Newell as it will further its expansion and complement its Growth Game Plan well.
We observe that Newell has been consistently undertaking initiatives to support its Growth Game Plan and strengthen its portfolio. Most recently, this Zacks Rank #3 (Hold) company purchased bubba brands inc. from its parent company, In Zone Holdings Inc. and Ignite Holdings, LLC ("Ignite") from private equity firm, North Castle Partners.
Similar to Baby Jogger, the buyout of bubba and Ignite were also made with the expectation of these brands being accretive to Newell’s growth rate, normalized EPS as well as its normalized operating income margin within the first year of the deal.
Better-ranked stocks in the same sector include Pilgrim's Pride Corporation (PPC) with a Zacks Rank #1 (Strong Buy), Nutrisystem, Inc. (NTRI) and WD-40 Company (WDFC), each carrying a Zacks Rank #2 (Buy).
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