Consumer Goods | United States
Equity Value (Δ)
Source: Bloomberg end of day market data; not adjusted for dividends (April 19, 2018).
Newell Brands (“Newell”) is a global consumer goods company with a portfolio of well-known brands.
WSD Capital Management announced its investment in Newell on April 19, 2018. In April 2016, Newell completed the merger of Newell Rubbermaid and Jarden Corporation (“Jarden”), creating a $16 billion global consumer goods company with a portfolio of leading brands.
Shares of the consumer goods conglomerate have lost over 50 percent of their value since the merger as Newell has reported a series of disappointing quarters. Earnings estimate have been slashed three times as a result.
The weakness spurred the resignation of three directors on the company’s board, including Jarden founder Martin Franklin.
On March 19, Newell disclosed that it reached an agreement with investor Carl Icahn to appoint five directors nominated by Icahn to the company’s board, a board which totals eleven directors.
Along with the board seats, the agreement envisions an accelerated transformation plan that will include divestitures of some the consumer goods conglomerate’s noncore assets aimed at improving financial flexibility, increasing free cash flow and returning capital to shareholders.
While there is a risk that Newell’s 3.5 percent dividend may be called into question, the revised transformation plan and its divestitures could generate in excess of $9 billion in after-tax proceeds. We believe the company is significantly undervalued and a streamlined consumer-facing portfolio will help management focus and reignite the performance in their core businesses, generating superior long-term value for shareholders.