- Published on 18 January 2018
Spectrum Brands has agreed to sell its global battery and lightning business to Energizer Holdings for $2 billion, just two weeks after announcing it was looking for a buyer.
The deal, expected to be complete by the end of calendar year 2018, subject to customary closing conditions including regulatory approvals, will mean Energizer will control more than 40 percent of the U.S. market and over 85 percent of the total market.
SunTrust analyst William Chappell said, “We believe having the category controlled by two rational players as a ‘functional duopoly’ should yield pricing and margin benefits for both companies for years to come.”
Spectrum’s battery and portable lighting business generated revenue of $866 million in 2017, accounting for 17 percent of the total revenue. The unit posted earnings before interest tax, depreciation and amortisation (EBITDA) of $169 million. The deal is expected to generate annual savings of $80 million to $100 million, and the combined company will have greater presence in EMEA and Latin America, Energizer said on a conference call on 16th January.
“Today’s announcement is a culmination of our efforts to sell the Battery Business in order to refocus Spectrum Brands and enhance shareholder value. While we have a long and proud heritage in the Battery Business, this is a key part of our re-allocation of capital strategy towards a faster-growing and higher-margin Spectrum Brands,” said David Maura, Executive Chairman of Spectrum Brands Holdings.
"The acquisition of Spectrum Batteries represents a compelling strategic, operational, and financial fit for Energizer," said Alan R. Hoskins, Chief Executive Officer of Energizer. "The combination will enable us to leverage Spectrum Brands' manufacturing assets, significantly expand our international business and enhance our long-term brand building capabilities as we broaden our portfolio with the Varta and Rayovac brands and our geographies with Spectrum Batteries' passionate global colleagues. We have great respect for Spectrum Batteries and the strong business its colleagues have built, and are excited to bring together the talented colleagues from around the globe from both organizations to drive our business to new heights. In addition, the top-line and free cash flow growth from this acquisition, combined with the opportunity to realize meaningful synergies, will further enhance our ability to drive long-term shareholder value."
Source: Spectrum Brands Holdings. Energizer Holdings Inc and Reuters