Jarden Buys Yankee Candle From Madison Dearborn

Jarden Corp (NYSE:JAH) announced Tuesday it intends to buy Yankee Candle Co. Inc. from the private equity firm Madison Dearborn Partners LLC. The private equity firm had earlier put a price tag of more than $2 billion on Yankee. But the higher price failed to attract a suitable buyer.


Yankee Candle to be a part of Jarden’s consumable segment

Jarden Corp (NYSE:JAH) owns popular brands like Mr. Coffee, Crock-Pot, Sunbeam, and Coleman camping gear. Yankee Candle is the largest maker of scented candles in the United States. It also makes candle accessories, car fresheners and home fragrance products, reports The Associated Press. Jarden Corp (NYSE:JAH) CEO Martin Franklin said in a statement that it will add Yankee Candle to its consumable product unit, which is expected to contribute to 35% of the company’s revenue after the acquisition.

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Jarden Corp (NYSE:JAH) plans to finance the deal with common equity, cash, bank debt and bonds. The deal is expected to close in the fourth quarter of this year. On a pro forma basis, Jarden Corp (NYSE:JAH) would have reported $7.7 billion in revenues and $1 billion profit for the year ending June 30, 2013. Its cash flow would have been 25% higher, reports Greg Roumeliotis of Reuters.

Yankee Candle a perfect match for Jarden

Analysts believe that Yankee Candle fits perfectly with Jarden Corp (NYSE:JAH)’s business strategy. And the deal is expected to provide several cross-selling opportunities in coming years. The transaction is expected to boost Jarden Corp (NYSE:JAH)’s gross profit and EBITDA margins. For example, Jarden Corp (NYSE:JAH) posted 28.9% in gross profits and 11.8% adjusted EBITDA margins for 12 months ending June 30. On pro forma basis, the figures would have been 32.1% and 13.2% respectively.

Madison Dearborn purchased Yankee Candle for $1.6 billion in 2006, and it put the company up for sale a few months ago. But potential buyers shunned the deal due to the hefty price tag Madison Dearborn had placed on Yankee Candle. Madison Dearborn was advised by Bank of America Merrill Lynch and Barclays Capital on the transaction.

Jarden Corp (NYSE:JAH) shares surged 6.12% to $45.58 at 11:39 AM EDT.