Wall Street seems to like this deal. The acquiring company usually back peddles. I've always thought it interesting that two of the other Battery makers are connected with shaving product lines. Rayovac-Remington Products- Energizer -Schick/Wilkinson sword -Duracell/Gillette/Braun. This deal has an interesting twist. United Industries has a cash tax benefit of $140 million. Many years ago the IRS took away the deals of buying bankrupt companies in order to use up their tax loss benefits. United is loaded with debt, but profitable. It will prove interesting to see if their is a acquisition responce by the competition.
Rayovac Buying United Industries for $476M
Tuesday January 4, 10:22 am ET
By Bernard Mcghee, Associated Press Writer
Rayovac Is Purchasing United Industries for About $476 Million in Cash, Stock
ATLANTA (AP) -- The battery maker Rayovac Corp. is buying privately held United Industries Corp., maker of Vigoro lawn care products, Cutter insect repellant and assorted pet supply products, for about $476 million in cash and stock.
Rayovac said the deal announced Tuesday would broaden its array of household products which currently also includes Remington shaving products and enable it to get more out of its operational expertise and existing relationships with retailers.
Under terms of the deal, Atlanta-based Rayovac would issue 13.75 million shares of its common stock and pay $70 million in cash for United Industries shares, which are not publicly traded. At Monday's closing price, the Rayovac shares would be worth $406 million.
In morning trading Tuesday on the New York Stock Exchange, Rayovac shares climbed $1.84, or 6.2 percent, to $31.40 -- a penny a share above its 52-week high set in mid-December.
As part of the deal, Rayovac would assume about $880 million of United Industries debt and a cash tax benefit of $140 million. United Industries is based in Maryland Heights, Mo., a suburb of St. Louis.
Rayovac's chairman and chief executive, David A. Jones, said the company had been looking at branching out into new industries. "We've actually spent the last few years exploring this category," Jones said in a telephone interview Tuesday morning.
Rayovac approached United Industries within the last few months, Jones said.
The acquisition of United Industries, which is expected to close in February, is part of an ongoing effort by Rayovac to expand its business beyond just making batteries, Jones said. Focusing on more than just one product will help attract more investors, he said.
"From an investment standpoint, we believe that the profile of the company will be more appealing and less risky," Jones said.
Jones said the company's diversification effort will continue, but he declined to go into details.
United Industries Chief Executive Bob Caulk said the deal would create a stronger company. He said he expected some local job losses as the companies combine and streamline operations. He expected the companies to save up to $75 million over the next three years.
United Industries had 2003 net revenues of $536.1 million and employs 1,700 people, including about 700 in the St. Louis area.
Its products also include Spectracide and Sta-Green lawn products, Hot Shot and Repel insect control products and pet supply products under the Marineland, Perfecto and Eight in One brands.
rayovac.com
spectrumbrands.com
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