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P&G, Newell: Are Takeover Rumors True?

Over the last six months, rumors that P&G is about to takeover Newell Rubbermaid continue to resurface. Take our poll to see if 'TheStreet' thinks a deal is imminent.

(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) - Get Procter & Gamble Company Report is about to takeover over food-storage and home products maker Newell Rubbermaid (NWL) - Get Newell Brands Inc. (NWL) Report 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


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


, 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


: "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."

Brian Gilmartin, founder and portfolio manager at Trinity Asset Management, and a


contributor, said he thinks that the two could be a fit, and a deal wouldn't be out of the question. However, he also noted that a large acquisition now would be a dilutive at a time when P&G's stock price is lagging.

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"P&G tends to do bigger acquisitions and pay a lot when the P&G's stock is at a loftier multiple, and thus the "currency" is cheaper," Gilmartin explained.

According to


, Newell executives announced at an analyst conference in Atlanta last month that it may -- as it already has in Brazil -- utilize

Avon Products'

(AVP) - Get Avon Products, Inc. Report

massive sales force to distribute Newell products where they currently aren't being offered, like China.

However, a Newell Rubbermaid spokesman said that this report was exaggerated, and that the company currently has no plans to expand the mentioned partnership with Avon beyond Brazil.

In light of all this, what do you think about rumors on a P&G and Newell Rubbermaid tie up? Take our poll below to see what


has to say.

-- Reported by Andrea Tse in New York


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