Tuesday morning, consumer product company Jarden Corp. (JAH) disclosed their plans to buy privately-held Yankee Candle Investments LLC for $1.75 billion in cash. Yankee Candle is the U.S.’s largest maker of scented candles, generating sales through a wholesale network of about 35,000 stores, corporate operated stores, e-commerce and direct mail catalogs. It also sells home fragrance products, car fresheners and other accessories for candles. The global candle and home fragrance market is estimated at $25 billion.
U.S. Madison Dearborn of Chicago acquired Yankee Candle in 2006 for about $1.65 billion. The private equity firm had put the company up for sale earlier this year, but couldn’t find a buyer with a minimum price set around $2 billion.
The transaction is expected to close early in the fourth quarter, at which time Jarden estimates pro forma net sales and adjusted EBITDA of approximately $7.7 billion and $1.0 billion, respectively, for the twelve months ended June 30, 2013.
Yesterday Jarden, who has brands like Mr. Coffee, Marmot, Crock Pot and Rawlings under its umbrella, said that the “transaction is expected to be funded with cash on hand, common equity and the balance through a mix of bank debt and bonds.” The deal is the most recent acquisition for the Rye, New York-based consumer goods conglomerate since it spent $60 million to buy Lifoam Holdings and Babysun Group for an undisclosed amount around nine months ago.
With the news of the acquisition on Tuesday, shares of Jarden swelled 10.4 percent to close the day at $47.23.
On Wednesday morning, the company said that it has commenced a public offering of 11.6 million shares of its common stock with the net proceeds to fund part of the purchase price of Yankee Candle. An additional 1.74 million shares will be made available for purchase to the underwriters for a period of 30 days, meaning a total of 13.34 million shares could be hitting the market.
Jarden had 108.4 million shares outstanding and $788.3 million in cash and cash equivalents as of June 30, 2103 (most recent quarterly filing with SEC).
Barclays Capital is the lead joint book-running manager of the offering, with Credit Suisse Securities, JP Morgan Securities and SunTrust Robinson Humphrey also in the mix.
Whereas investors liked hearing the news of buying Yankee Candle on Tuesday, they’re not so happy to hear about more shares coming out. In early Wednesday trading, shares of JAH are down about 3 percent at $46.10.