Atlanta (ouch!) based Rayovac is expected to announce a $476M acquisition of closely held United Industries, a consumer-products maker of such brands as Cutter insect repellant, Sta-Green fertilizer, and Eight in One Pet supplies, according to Dennis Berman
The move is the latest in Rayovac’s plan to transform itself from a seller of low-cost batteries, which has been its focus for nearly 100 years, into a diversified purveyor of consumer products. In acquiring United, which operates under the Spectrum Brands name in the U.S., Rayovac expects its battery sales to account for just 40% of overall revenue, down from 67%.
The deal will pay St. Louis-based United a total of $406 million in Rayovac shares, which closed trading Monday on the New York Stock Exchange at $29.56. Rayovac will also pay $70 million in cash to United’s shareholders, while redeeming or replacing $900 million of United’s outstanding debt. The companies are targeting cost savings of about $70 million to $75 million, company executives said. They said the deal will be immediately accretive to Rayovac’s earnings.
Seems rather strange that a battery company would acquire a fertilizer and insect repellant firm, until I read that “both have long been under the wing of private-equity firm Thomas H. Lee Partners“. Ah, sounds like packaging for a bigger deal. Madison has growing risk here with respect to Rayovac’s ongoing employment.
