In September, Jarden Corporation acquired American Household, parent company to Coleman (See BOSS_0438). The deal closed on January 24 and Jarden recently held an investor conference call outlining fiscal 2004 performance and gave some insight on the integration of American Household and Coleman into Jardens existing platform.
Jardens chairman and CEO, Martin Franklin, told analysts that his team has been “pleasantly surprised” with the synergies between the two companies. When the deal was first announced Jarden forecasted $45 million to $111 million in cost savings between the two companies. Franklin now sees the lower end of this estimate as “very, very conservative,” and it is the companys goal to get as close to the $111 million as possible.
Part of the benefit was due to the fact that Coleman had a better than expected fourth quarter. Franklin said that the business “came out of the box performing,” which put them in a cash position $30 million to $40 million better than they originally expected.
Jarden has also seen immediate savings on the corporate side of American Household, and has already identified $17 million in initial savings. Two corporate offices will be closed this year and there will be a “25% reduction in head count.”
Jarden expects to see more savings by rolling together insurance programs as the policies expire.
The company will also be incurring some additional expenses, especially in relation to the Sarbanes-Oxley act. Jarden spent $1 million in 2004 to ensure that the company complied, and now expects to spend an additional $4 million to bring American Household to the same level of compliance.