US conglomerate Newell Brands buys NZ-owned Sistema Plastics for $660m

US-based conglomerate Newell Brands is paying $US470 million ($660 million) for Auckland-based food storage company Sistema Plastics in one of the year’s biggest takeover deals.

In a parallel deal, Newell is buying US company Smith Mountain Industries, which makes home fragrance products under the WoodWick Candle brand, for $US100 million.

Newell Brands has a market capitalisation of $US22 billion and is based in Hoboken, New Jersey,

Sistema has annual revenues of $US145 million and was co-founded by managing director Brendan Lindsay in a Cambridge garage 34 years ago.

Today it exports to 82 countries around the world and counts its customers in the millions. It has just opened a new 52,000sq m factory in Auckland and employs 700 staff.

Mr Lindsay, who held 90% of Sistema's shares, says the company has seen its brand grow into a world recognised leader in innovation with a strong heritage and global distributor network.

“Newell has the expertise and market access that will enable them to take the business to the next level and create new opportunities for the company, especially in North America,” he says.

“The growth Sistema has experienced in recent years can be attributed in a large part to the hard work and dedication of our New Zealand and overseas employees.

"That is why I am absolutely thrilled that Newell has agreed to keep manufacturing in New Zealand for the next 20 years at our recently opened 52,000sq m manufacturing facility at a greenfields site near Auckland airport."

Geographic expansion
Newell says Sistema’s markets include one where Rubbermaid products are not available, creating significant potential for geographic expansion.

“Sistema has also been expanding into the fast-growing beverages category, another area of strategic focus for Newell Brands. Additionally, Sistema will soon complete a state-of-the-art manufacturing facility that will enable Newell Brands to meet the capacity needs created by continued category growth,” the company’s statement says.

Both businesses are growing at rates well above Newell Brands’ core sales growth rate and are expected to be immediately accretive to normalised earnings, Newell says.

“These two bolt-on acquisitions strengthen our leadership positions in three of our most important 'Win Bigger' categories, food storage, beverage and home fragrance,” Newell chief executive officer Michael Polk says.

“We will apply our advantaged Newell Brands’ capabilities and scale to further both businesses’ already strong performance.”

Newell says it is funding the acquisitions from the proceeds of divestments and no debt will be raised.

The company has previously announced its intention to divest about 10% of its portfolio (about $US1.5 billion of annualised revenue), including its tools business, which it has agreed to sell to Stanley Black & Decker for $US1.95 billion.

Newell expects to complete the divestitures in the first half of 2017, while the Sistema acquisitions will be completed in the second quarter of 2017 and the Woodwick Candle one in the first quarter.

Cameron Partners and Rothschild acted as financial advisers to Newell Brands on the acquisition of Sistema.