On September 8, Spectrum Brands Holdings, Inc. and ASSA ABLOY AB announced that they entered into a definitive Asset and Stock Purchase Agreement in which ASSA ABLOY will acquire Spectrum Brands’ hardware and home improvement business for $4.3 billion in cash.
In the press release, Nico Delvaux, President and CEO of Assa Abloy, noted the deal constitutes an important strategic step for Assa Abloy to develop its residential business in North America. He further stated, the acquisition furthers Assa Abloy’s strategy to strengthen its core business while accelerating its transformation from mechanical to digital solutions.
Spectrum Brands is a consumer products and home-essentials company and a leading supplier of residential locksets, residential builders hardware, plumbing, shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn and garden and home pest control products, and personal insect repellents. According to Spectrum Brands, the deal will simplify its business allowing it to have three focused business units, Global Pet Care, Home & Garden, and Home & Personal Care, with leading market share, strong growth opportunities and consistent performance. The company stated that the approximately $3.5 billion in net proceeds will be used to strengthen Spectrum Brands’ balance sheet by repaying debt and reducing its gross leverage ratio to approximately 2.5x times in the near term.
The pending deal is expected to close following the receipt of certain regulatory approvals and customary closing conditions. The agreement includes customary transition services for both forward and reverse transitions services that will be effective upon consummation. The purchase agreement also includes certain termination rights, including the right for either party to terminate the Purchase agreement if the acquisition is not consummated on or before June 8th 2022.
On September 7, Spectrum Brands’ shares (NYSE: SPB) were valued at $79.02 and at closing on the day of the announcement, September 8th, prices rose to $93.08. In comparison, on September 7 Assa Abloy’s shares (OTCMKTS: ASAZY) were valued at $15.91 and fell to $15.63 on September 8th.
Spectrum Brands is represented by Davis Polk & Wardwell LLP with Credit Suisse Securities LLC and RBC Capital Markets, LLC being its financial advisor. Assa Abloy is represented by Linklaters LLP and Bank of America Europe DAC, Stockholm Branch being its financial advisor.