Jarden Buying Yankee candle for $1.75B

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Sept. 3 (Bloomberg) –- Jarden Founder and Executive Chairman Martin Franklin discusses his company’s agreement to buy Yankee Candle for $1.75 billion, adding the 43-year-old scented candle maker to its collection of more than 120 consumer brands. He speaks with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Computing market, paying $7.2 million to throwing good money after bad.

Oh, ye of little faith, matt miller.

We had been up as much as 100. this is amid concerns of syria.

Consider that we have just ended a pretty horrible month for stocks, right, so a rebound, i think, was refreshing today, but we could not end on the highs or near the highs.

You think of all of the deals.

That should have added to all of the optimism.

And one manufacturing company was at the highest in two years.

And obviously, yesterday was a holiday, so we had more trading.

We are so used to say ing that trading is like, but it was better than it has been over the last three months, i think eight % or 9% better, and things are looking up for the economy, and i do not want to ruin what i am going to talk about in my roundup.

Certainly not.

What it would be fantastic.

Jim, what do you make of the fact that august we have the worst month of the year, and september, the first day, we were up 100, but we finished the day only up 23 on the dow.

One of the things people are forgetting is interest rates.

And as interest rates have been going up, especially since may, it has been a big problem for the stock market, and you could almost say that was the problem today.

292 on the 10-year note, and then the markets stumbled after that.

This stock market cannot handle higher interest rates.

It has been clear for the past few months that it is a problem, and it continues today.

I wanted to point out telecom closing down, the sector as a whole, given the deals.

No doubt, verizon has a big effect on that, number two in the top 10. no big deal.

These other stories we are tracking ahead of tomorrow's open.

You start.

Five years after a cancer drug company was sold to eli lilly and four years after serving jail time in an insider trading scandal, a man making his comeback in the biotech world.

He founded imclone, developing one of the most targeted cancer therapies.

He now plans to spend out two units of his new venture, and they will become publicly traded companies, and he will also start a group in china.

Even though he is barred from being in the u.s.. here is the thing.

He was one of these very specific executives who was both a scientist and a marketer.

He could wear both hats.

He cannot run the two companies, but he understands how to create those molecules and how to market them.

In the u.s.. i would say this, if he gives you a tip, make sure no one is around and that no one is on the phone.

Or make sure he does it in the presence of a lot of people.

That right.

Jeff bezos is ready for a new golden era.

Even if he does not have all of the answers, he spoke to the washington post since he required -- acquire the iconic newspaper, and he said he is ready to start conducting experiments and see what works.

In other words, just as hard for him.

He does not have a grand master plan, it sounds like.

He is going to throw things on the wall and see what sticks.

Throw it up on the wall and see what sticks?

A lot of people say this is vanity plate.

250 million dollars is such a fraction of his total net worth that he can do it.

It is still big money.

Is this a guy who is spending millions to create a clock that works for a long time?

The valuation on the newspaper was pretty high, so a lot of people were saying, is this an investment, or is this a vanity play?

Maybe it is a combination of the both.

In the interview, it did not sound like he was going to make big changes, though he was easing them in maybe gently before he drops it.

One of the tenants will be patients.

He is in for the long haul, and that amazon, certainly, he has made that are not paying off now, but he expects them to pay off down the road.

And amazon with its margins of just 7/10 of one percent, it operates, so if the washington post does not make a lot of money, and that would appear to be a problem initially.

They could use the paper for liners for the amazon box.

They can do that.

And another company looking to make more money with an interesting strategy is the british clothing brand -- swedish clothing line h&m. they want to appeal to the manly man.

There is the company outdoor wear heritage, and that includes longjohns that can be worn as pants.

You can buy them on stores and online, and the chain is also opening up its men's only store, but you have to go to stockholm for that one.

This is great news for adam johnson.

He has money to spend on his close.

Now you can go to h&m. i do not know if wearing longjohns . some plaid flannel, hunter car.

I thought seattle went out and so did flannel.

Greg's people where longjohns when you go to visit switzerland.

I will not make a comment there.

I am very excited about august automotive sales.

They are coming out tomorrow, and we could see the highest august ever in terms of dollars spent.

There is so many things playing in favor of the automakers and in favor of the dealers.

Cars out there are 11.4 years old, so you have to go by one.

You are getting credit better than you have in the last five years, and you can lease it, which makes it even cheaper, which i think the average lease is $50 cheaper, and if you purchase a car, they look much better.

The ford fusion sold out, as did some other cars, as well.

Should we tell them that you spent the last week in detroit?

I would spend every week in detroit.

What normally is a very boring kind of humdrum -- not impressed, i have got to tell you.

Auto sales.

Auto sales on a year-over- year basis were higher than pre- crisis, and august is going to be the highest in dollar sales, not in volume, because the cars are more expensive now.

Is that not great?

31,000 dollars is the average, the highest ever.

They have cut that production in the post crisis air out, and this would be kind of average for them in 2004, 2005. when they were like $25,000 apiece.

It is huge for them because they have cut back so much.

It is good news for shareholders.

Obviously, the shares have performed well, and toyota is off of the book.

It could be good news for the american worker.

Not many have brought back full production, but they just brought back 1200 to make the fusion.

It works?

Really, really?

It appears google has ended months of online speculation about the name of its latest android operating system.

They announced they teamed up with the chocolate maker nestle, and it will be called android kit cat -- kit kat, and there is the jellybean.

Apparently, there will be quite a number of them given away as part of the release.

Well, i am a fan of kit-kats.

And i like the name.

I do not get it.

A are light and fluffy.

Why spend as much money on that as you would on a snickers, which is more satisfying?

Taste great, less filling.

When i spend money, i want to get.

You are absorbing a lot of marketing messages.

Candy aside, what about the android?

Do you think this actually works?

You know, i would love to spend a month or two trying an android phone and see what it is like.

I know the car industry is giving cars to test drive.

I do not know if i can survive without my apple iphone, the ios.

Here is the first trade for tomorrow and a look at what is coming up next for tomorrow on street smart.

A maker of blenders just bought another brand.

The ceo of the consumer conglomerate explains what is so hot about yankee candles.

And before the samsung smart watch, there was this thing.

I can always use it.

High-tech timepieces.

Plus, moving into indian movies, and a new deal that allows you to skip the film festival with independent flex.

Stay tuned, for your first trade tomorrow, all coming up when street smart continues.

?/ all right, another headline deal to talk to you about.

Buying yankee candle for about 1.7 5 billion dollars, helping it to expand its consumer portfolio.

This is jarden's biggest ever purchase.

They play a large role.

Just take a look at your home.

The coffee, the crockpot, jarden owned.

Coleman, the barbecues used over the weekend, that is another jarden brand.

Martin franklin brought all of these brands under one roof, and he joins us now.

Martin, welcome to "street smart." thank you.

Why yankee candle?

It is like our matches and are playing cards and our toothpicks.

It is a basic product that is used everyday in this nation and in other nations, as well, and it fits right into the sweet spot of what we like to buy.

We like to buy businesses that are market leaders, where we can find brands that are synonymous with the category, and y fits into that.

We like businesses that have very high cash flow, which perform well in bad economies as well as good economies, and businesses that we combined, what we view at the right price, and these things all came together for this transaction.

We have looked at yankee for many years.

We looked at it in 2007. we were buying some other things at the time, and the timing was not right, and the multiple was higher than i think we can afford, but the reality is things came together through a series of circumstances that created the opportunity, and we were ready to move.

I guess it paved the way.

Martin, the stock trading up about 10% here.

What is this going to mean to earnings right off the bat?

Well, coincidently, it is about 10%, it should be at least 10%, to earnings.

It is that way on a pro forma basis.

Obviously, this is not the only factor for us, because with the lower interest rate environment, things could be the creative.

This takes margins from below 12% to above 13%. it takes our gross margins to over 32%, from the high 20s. also, the organic growth of our business will be enhanced by this.

At least it will match the midrange of our stated long-term 3%, five percent growth.

They have been growing historically faster than that.

We modeled it conservatively in how we have looked at it, but if they continue to do what they do, it will be a great addition to our portfolio.

You paid 2.1 times sales, and that is a very reasonable, i should say, price, and how were you able to get such a low price?

Well, i do not know if it is so low.

It is in a fund that is an old fund for them.

It has been a good performer for them.

The private equity world, different fonts at different times for different performance, and that was in a 2007 generation fund where most did not perform that well in those vintages of funds, and this has actually been a pretty good performer for them of that vintage fund, but they have been very good proprietors.

It went through a process that did not work for them in the private equity world, and then they looked at a recap, at a time when the bond market got wobbly, and that was just fortuitous for us.

It created an opportunity for us to reach out, reach a price point where they were comfortable, that they felt it left the parameters of where they would transact, and, if you like, that was also the maximum of where we would transact.

We shook hands, and the deal we ended up with was exactly the same.

This very low interest- rate environment, which you just pointed to, which makes it easier to do deals, but we have not seen a ton, martin, i guess until today, where we saw a slew of them.

Do you think we will see more activity now?

Ceo 's like yourself making moves as we speak?

I do not track these things probably as much as some, but the transactions you have seen today, the big ones, they are more in the telecom area.

The consumer which i do track , rather than a sale, they can get more value out of an ipo, and if we had not done this transaction, yankee would have probably gone down the path of doing a traditional ipo.

That works for us here and is probably the case for others.

This is pretty much that yankee candle is a yankee- esque type of company.

In the consumer space.

There are probably 200 companies that we have looked at that we did not buy.

The criteria has not changed for us, and we see lots of companies that fit that mold.

It is probably not fair to identify one or the other, but they really do fit into all different segments.

I can't think of a product that is synonymous with, say, a bic lighter.

A better mousetrap.

You buy a victor.

Candles, my grandmother's love them, my folks like them, they are getting older.

I do not know that many 20, 25- year-olds or millennial's who are out buying scented candles.

Adam, you have got to get out more, because they are out there buying.

In all seriousness.

90% of the yankee customers are women.

Trish will probably be more familiar with the customer base.

-- it has been pretty consistent.

All right, we are going to leave it there.

He needs them for his romantic dinners.

Thank you for joining us, martin, cofounder of jarden.

And what about the smartphone?

It was actually introduced 30 years ago.


We have got the story, coming up.

? samsung is expected to unveil its smart watch, but one company that has had a lock on the market for years is casio.

Just take a look at the original smart watch.

I had one.

Presented the watch from casio, the sports watch that is ready for action.

The new casio check your pulse.

I can always use a new casio.

Whenever you want to take control of a tv or vcr, look no further than your wrist.

How about that?

You used to have a casio.

I did.

We are talking reganomics, next.


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