Energizer Updates On Spectrum Brands' Battery And Portable Lighting Unit Deal

(RTTNews) - Energizer Holdings, Inc. (ENR) announced that it reached an amended acquisition agreement and proposed a remedy for consideration to the European Commission in relation to its proposed $2.0 billion acquisition of Spectrum Brands' (SPB) Battery and Portable Lighting Business.

In addition, Energizer also announced that it has entered into a separate definitive agreement to acquire Spectrum Brands' Global Auto Care Business in a cash and stock transaction valued at approximately $1.25 billion.

Energizer said it has been working closely with the EC to develop a mutually-acceptable solution to address the discrete concerns identified by the EC in its preliminary assessment of the proposed acquisition of Spectrum Battery. The remedy set forth by Energizer includes the divestiture of the Europe-based Varta consumer battery business, including manufacturing and distribution facilities in Germany. As a reminder, Energizer has already obtained approval of the transaction in the United States, Australia, and Colombia.

Based on the original purchase price, net of anticipated divestiture proceeds, Energizer now expects net purchase price to be in the range of $1.4 billion to $1.5 billion. Spectrum has agreed to share in any decline in value on the sale of the Europe-based Varta consumer battery business below the targeted sales price, up to a maximum of $200 million.

Based on the amended agreement, the net sales and adjusted EBITDA of the retained businesses are expected to be in the range of $510 to $520 million and $80 to $90 million, respectively. Synergies are now expected to be in the range of $55 to $65 million. The Company continues to expect to fully realize all synergies within the first three years of ownership. The present value of the tax step up on assets acquired in the U.S. is expected to be in excess of $100 million.

Contingent upon the EC's approval of the proposed remedy, Energizer expects to close this transaction at the beginning of calendar year 2019.

These transactions, excluding acquisition and integration costs, are expected to be immediately accretive to Energizer's adjusted free cash flow and significantly accretive to adjusted earnings per share following our realization of targeted synergies.

As a result of these two separate transactions, Energizer expects pro forma sales of $2.75 billion, adjusted EBITDA of approximately $670 million and adjusted free cash flow of approximately $340 million, including full run-rate synergies.