Yankee Candle Smells Like Money To Jarden

By Sam Lewis

Consumer products manufacturer to take over largest maker of scented candles in $1.75 billion deal

Jarden, the Rye, NY based manufacturer of consumer brands like Mr. Coffee, Oster, Rival, Rawlings, and Coleman, has agreed to buy The Yankee Candle Company. Jarden will pay Yankee Candle $1.75 billion in cash, which is nearly identical to what private equity firm Madison Dearborn Partners paid for the company in 2004 ($1.4 billion and $300 million in assumed debt.) The price is close to eight times the candle company’s projected yearly earnings for 2013.

The roots of multi-faceted Jarden were established in making Bell canning jars. Martin Franklin, Jarden’s executive chairman and former CEO, renamed the company Jarden based on the company’s canning jars and its focus on products for and in the home, which often have dens (hence, "jar-den"). On the surface, Jarden’s business appears to be a jumbled up, conglomeration of very diverse brands, but it also shows a working strategy of buying leading brands in niche markets with expanding sales. Jarden’s attainment of South Deerfield, MA-based Yankee Candle — operating 560 stores in the U.S. and Canada — seems to be an excellent fit for Jarden’s business model. The acquisition of Yankee Candle is Jarden’s largest purchase to date.  The company’s next largest endeavor happened in 2010, when it paid $450 million for household and baby-care brand Nuk from French oil company Total FP. 

Franklin has stated publicly, on more than one occasion, that the company is a serial acquirer, buying up successful brands at a good price. He also said that the company expects to reap 3 to 5 percent growth each year based on its acquisitions. Yankee Candle boasted big gross margins last year, at nearly 57 percent, with profits of $56.3 million. Jarden’s wasn’t slouching either, coming in with 29 percent in gross margins on $6.7 billion in revenue, according to Bloomberg’s BusinessWeek.

Yankee Candle CEO Harlan Kent will continue to run the candle maker’s business. "This is a transformative milestone for Yankee Candle. Over the past 40 years, we have built a truly iconic brand with a deeply loyal customer base,” said Kent. “Jarden is well known as a stable, long-term owner of businesses, and this will provide us with a perfect platform on which to grow.” With the purchase of Yankee Candle, Jarden seems to have set itself up for a continued, slow, upward swing, which raises the question: will Yankee’s next candle smell like money?