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Spectrum Brands Holdings (NYSE: SPB ) will be acquiring the Hardware & Home Improvement (HHI) Group from Stanley Black & Decker (NYSE: SWK ) for $1.4 billion in cash, the companies announced today. The deal is expected to be immediately accretive to free cash flow, EPS, and EBITDA for Spectrum Brands. The company reaffirmed its plans to initiate a quarterly dividend of $0.25 per share and said future dividend increases would be evaluated. The deal is expected to close by the end of the first quarter in 2013.
Stanley Black & Decker said more than half of the proceeds will be used to repurchase shares and a smaller portion will go to "modest debt reduction." The money will also be used to fund the previously announced acquisition of a company called Infastech -- which is well-positioned in Asia.
The company considers the sale of its HHI division to be a strategic divestiture and an attempt to better diversify its operations. Ninety percent of HHI revenues come from North America and more than 50% of revenue comes through U.S. home centers, according to Stanley Black & Decker. HHI had 2011 revenues of $940 million. It provides residential locksets, residential builder’s hardware and plumbing fixtures marketed under the Kwikset, Weiser, Baldwin, Stanley, National and Pfister brands, among others
Shares in Spectrum Brands spiked this morning on the news, trading up as much as 15% just after the opening bell. Stanley Black & Decker shares remained relatively unchanged in early morning trading.