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P&G, Newell: Are Takeover Rumors True?

Stocks in this article: PG NWL

(P&G, Newell story updated with comments from Newell Rubbermaid and more analyst commentary.)
NEW YORK ( TheStreet) -- Over the last six months or so, rumors that P&G (PG) is about to takeover over food-storage and home products maker Newell Rubbermaid (NWL) have resurfaced for the third time, fueling expectations that perhaps there's more to the chatter than just mere speculation.

The origins of the rumors remain unclear, and neither company would comment on them; though Barrington Research analyst Derek Leckow suspects that some of the chatter might be fueled by the fact that many Newell-Rubbermaid senior executives -- including Newell's CEO, Mark Ketchum, and Ted Woehrle, the company's chief marketing office -- had crossed over from P&G.

All in all, most of the sources TheStreet spoke to believe that the rumors should be disregarded as mere noise, and are unsubstantiated.

"These rumors are nonsense," Deutsche Bank Securities analyst Bill Schmitz said. "P&G and Newell go together like oil and water, or skin cream and saw blades. You can quote me on that."

Schmitz asserts that there's no real overlap between P&G and Newell Rubbermaid.

"P&G sells consumables; Newell sells largely semi-durables," he explained. "The retailers are different, the end users are different, and even the shareholder base is different. P&G's Gillette owned the foundation of Newell's pen biz and sold it; I don't think PG wants it back."

According to Bloomberg, trading of bullish Newell Rubbermaid options rose to their highest level in almost three months on Jun. 1, over renewed rumors that P&G was going to takeover over Newell Rubbermaid.

Clearly, Schmitz is skeptical of a tie up between P&G and Newell; still, he left a bit of wiggle room in his correspondence with TheStreet: "The only thing P&G may be interested in is Newell's late-stage emerging markets opportunity. The massive populations in these regions are going to start buying pens, car seats and high-end tools soon; and P&G has the infrastructure."

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