Where other prospective buyers may see mature products whose best days are behind them, Jarden Corp. sees a bright future. That vision has led the Rye, N.Y.-based company to assemble, largely by acquisition, a grab bag of consumer goods that includes playing cards, food preservation equipment, plastic utensils, clothespins, toothpicks, cookware, and home canning jars and lids, to name a few. And Jarden is on the prowl for even more producers that share the advantage of being kingpins in small markets. Martin E. Franklin, the company's CEO and principal driver of its acquisition program, is quick to disabuse anyone of the idea that Jarden comprises merely a catalogue of unrelated parts. Rather, he says, Jarden hews to a carefully honed model that keys on buying consumer products with "easily recognizable" brand names, dominant positions in niche markets, and common distribution channels and that are heavy on solid cash flow management to finance growth and additional acquisitions. Moreover, he says, the company is a disciplined buyer that spikes 20 to 25 opportunities for every deal it makes. "We are taking these relative cash cows and saying if we could have these companies in a group, we will be able to leverage the brands, introduce new products, and drive organic growth in what were relatively mature businesses," Franklin says. "I don't care if we are making playing cards or matches. They are all products that own their markets." Since Franklin became CEO in 2001, Jarden acquisitions have included U.S. Playing Card Co., the world's largest playing card manufacturer with brands including Bee, Bicycle, and Aviator, purchased for $232 million; Lehigh Consumer Products, maker of rope and hardware, $155 million; Diamond Brands, which makes matches, clothespins, toothpicks, and plastic cutlery, $90 million; and Telia International, producer of the FoodSaver food vacuum preservation system, $160 million. Previously, the company's name brands included the Ball and Kerr canning lines. One linchpin of the approach, Franklin says, is that these seemingly disparate lines can be put through similar distribution channels - principally mass merchants, including warehouse clubs and do-it-yourself home improvement chains. A second is the capability to generate strong cash flows. And still a third is the pricing power that comes with being top dog in a niche market. Together, they keep Jarden focused on running a tight financial ship, both in the prices the company will pay and in postacquisition management aimed at recycling cash. "We built the company by keeping the EBITDA leverage to total debt under 3.5 times," Franklin notes. "With the high free cash flow characteristics of our businesses, that generates a lot of free cash flow to secure the next round of acquisitions." Franklin and Jarden vice chairman Ian G.H. Ashken make up the company's acquisition team, handling virtually the entire deal process from conducting searches, to fielding leads from bankers and finders, to spearheading the due diligence on businesses they decide to buy. A lot of Franklin's time is spent in cold-calling prospects who may put their companies on the block some day. He spoke with U.S. Playing Card's CEO every three or four months before the company was ready to sell, he points out. "I tend to network a lot with the people who run businesses," Franklin says. "There may be no deal but maybe some day there will be. I spend a lot of time on the phone and a lot of time visiting people. Copyright 2004 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com

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