Newell Rubbermaid's pending Jarden acquisition, which was announced in December 2015 and recently valued at $19.5 billion, combines Newell's portfolio of brands such as Sharpie, Papermate, Lenox, Rubbermaid, Graco. Elmer's and Calphalon with Jarden's more than 120 brands, including Jostens, Coleman, Yankee Candle, Sunbeam, Holmes, Oster, Mr. Coffee and Rawlins brands.
Earlier this month, Newell Rubbermaid announced the sale of Levolor and Kirsch window coverings businesses to Hunter Douglas for about $270 million, with proceeds slated to go to pay down debt. "We believe the décor business will benefit from being part of Hunter Douglas, an owner more strategically committed to building and investing in the window coverings market," Newell Rubbermaid President and CEO Michael Polk said in announcing the window coverings business sale.
"The focus on divestitures is particularly sharp given NWL's higher degree of leverage post the deal," Citi analyst Wendy Nicholson told clients in a note last week. "We see at least one potential divestiture: Jostens," Nicholson wrote, suggesting the business "could be split up and sold in pieces."
Added the Citi analyst: "We see systematic issues for the category given the current lack of relevance for the products to most consumers. We learned that sales-force turnover has been a significant problem in recent years, which has led to less consistent and overall weaker sales patterns."
"The biggest cost savings opportunities are largely behind Jostens," said Nicholson. "As such, we believe that Jostens is a great candidate for divestiture, as the fit into NWL's growth game plan seems imperfect to us."
Jostens designs and makes custom jewelry, apparel, publications and consumer goods that serve the K-12 educational, college and professional sports segments. The bulk of Jostens' revenue is believed to come from K-12 school yearbooks (43 percent) and scholastic products such as class rings (24 percent). The remainder is from caps and gowns and varsity jacket sales, along with keepsake products sold to colleges and championship rings to professional sports.
Over the years, Minneapolis-based Jostens has made championship rings for the NCAA as well as professional football, baseball, basketball leagues and NASCAR.
In 2014, a proposed $500 million merger of Jostens with its closest rival, American Achievement Corp., was abandoned after the Federal Trade Commission raised concerns that the combination "would control an unduly high percentage of the high school and college rings markets, making it a dominant firm with only one smaller meaningful competitor in both markets." AAC, an Austin, Texas-based company, and its Balfour brand sell school rings, yearbooks, athlete letter jackets and other recognition products for the educational and military markets. AAC also is known for making championship rings for professional sports.
"There are no immediate plans to divest any Jarden businesses at this time," Newell Rubbermaid spokesperson Nicole Quinlan said in an email response.