Spectrum Brands Acquires Hardware Group (SPB, SWK, HRG)

Consumer products company Spectrum Brands Inc. (NYSE: SPB) today announced that it has signed a definitive agreement to acquire the hardware and home improvement division of Stanley Black & Decker Inc. (NYSE: SWK) for $1.4 billion in cash. The Stanley group manufactures locksets, hardware and faucets sold under brand names like Qwikset, Stanley and Pfister.

Spectrum, with a market cap of about $2.1 billion, will finance the deal with a new term loan and new senior unsecured notes. The company has received financing commitments from Deutsche Bank and Barclays. The deal will close in two stages: the Stanley group part is expected to close in the first quarter of 2013 and the part involving a Taiwanese manufacturer is expected to close in the second quarter. Spectrum will set aside $100 million of the purchase price until the closing of the Taiwanese part of the deal.

In its announcement, Spectrum said that on a combined basis for the 12 months ended on July 1, the Stanley group would have accounted for 23% of Spectrum's total revenues and 28% of adjusted EBITDA. Spectrum's chairman and managing director/executive vice-president of Spectrum's majority shareholder Harbinger Group Inc. (NYSE: HRG) said:

The addition of HHI is consistent with our strategy and we are confident that we are acquiring the business at an attractive entry point and that the benefits of our increased scale, diversity, margins and free cash flow generation will accrue to our shareholders over time.

Shares of Spectrum closed up 0.3% last night at $41.16 in a 52-week range of $23.04 to $ 42.78.

Shares of Stanley Black & Decker closed down about 1.1% last night at $74.23 in a 52-week range of $53.21 to $81.90.

Paul Ausick


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