Newell to Acquire Rubbermaid in a Deal Valued at $5.2 Billion

Newell Co., maker of household goods such as Levolor blinds and Calphalon cookware, agreed to buy Rubbermaid Inc., maker of plastic household products and Little Tykes toys, in a deal worth about $5.2 billion, the companies said Wednesday.

Newell, which also makes Anchor Hocking glassware and Rolodex organizers, said the addition of Rubbermaid would allow it to better exploit Europe’s collapsing commercial borders, a change expected to gain speed with the arrival in January of the continent’s common currency.

“Rubbermaid and Newell are a strategic fit,” said Newell Chief Executive John McDonough. “The Rubbermaid brands bring us further breadth of distribution, increased shelf space and an enhanced presence in Europe.”

Newell’s shares fell, however, on concern over the size of the deal. Rubbermaid is nearly twice the size of Newell. Rubbermaid also reported much-lower-than-expected earnings for the third quarter--21 cents a share versus 30 cents forecast by analysts.

But Newell’s years of experience in cutting costs and Rubbermaid’s well-known brands will make for a successful combination, said Lois Lefkowitz at Loomis Sayles & Co., which holds about 706,000 Newell shares and another 528,300 in Rubbermaid.

McDonough is to become chief executive and vice chairman of the new company, Newell Rubbermaid Inc., which would have annual sales of more than $6 billion.

Under the deal, Newell will swap 0.7883 share for each of Rubbermaid’s outstanding shares. Newell also would assume about $500 million in debt.

Based on about 150 million Rubbermaid shares outstanding, the equity value of the deal is about $5.17 billion, following a 10.6% decline in Newell’s stock price.

Shares of Freeport, Ill.-based Newell rose $5.81 to close at $43.25 on the New York Stock Exchange.Wooster, Ohio-based Rubbermaid’s shares rose $6.13 to $32, also on the NYSE.