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Spectrum Brands Appliance Business Put Up For Sale

Spectrum Brands, who are a major supplier of appliances to The Good Guys, Harvey Norman and Bing Lee have put their appliance business up for sale, they are expecting to get between $2.2 billion to $2.5 billion for the business.

The Company is also looking to merge with their largest shareholder HRG Group. Spectrum Brands products include Russell Hobbs, Black and Decker, Kwikset locks, George Foreman grills, and Hot Shot bug sprays.

Spectrum, which emerged from bankruptcy in 2009, has assembled a portfolio of brands such as Black & Decker tools, George Foreman and Russell Hobbs appliances, Cutter insect sprays and Rayovac batteries. Last month, the Melbourne based Company, agreed to sell its battery and lighting business to Energizer Holdings Inc. for US$2 billion in cash. That agreement won’t be affected by the HRG transaction.

The move to merge with HRG will also wind down HRG, a publicly traded holding company that owns about 59% of Spectrum, which is its principal holding.
According to the Wall Street Journal the transaction, which Spectrum expects to close by the end of the second quarter, is subject to shareholder approval. It is expected to be tax-free to the two companies and their shareholders. Spectrum has a market capitalization of $6 billion, while HRG’s market cap is roughly $3.21 billion.
Under terms of the deal, HRG shareholders will receive in aggregate the same number of shares they currently hold, subject to certain adjustments to account for HRG’s net debt and transaction costs, plus a $200 million upward adjustment. This bonus, Spectrum said, recognizes that the deal transforms Spectrum into an independent public company with no controlling shareholder and certain favourable tax attributes of HRG.

Spectrum shareholders will receive one newly issued share of the combined company for each share held.

Once the deal is done Spectrum’s management team will remain in place. HRG’s board will be replaced by the Spectrum board.

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