Spectrum Brands to Become Independent Company
with Widely Distributed Shareholder Base
Combined Company Well Positioned to Advance
Strategy as Faster-Growing, Higher-Margin, More Focused Consumer
Brands Business
Spectrum Brands Management Team to Continue in
Current Roles
Spectrum Brands Holdings, Inc. (NYSE: SPB) (“Spectrum Brands”),
a global consumer products company offering a portfolio of leading
brands providing superior value to consumers and customers every
day, and HRG Group, Inc. (NYSE: HRG) (“HRG”), a holding company
with shares of Spectrum Brands as its principal holding, today
announced that they have entered into a definitive merger agreement
pursuant to which Spectrum Brands will combine with HRG. As a
result, HRG’s shareholders will effectively hold HRG’s interests in
Spectrum Brands directly following the combination. The transaction
has been unanimously recommended by the Special Committee of
independent directors of the Spectrum Brands Board of Directors
(the “Special Committee”), and was also approved by the Spectrum
Brands and HRG boards.
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Under the terms of the agreement, immediately prior to closing,
HRG will effect a reverse stock split such that HRG shareholders
receive in the aggregate a number of shares of the combined company
equal to the number of shares of Spectrum Brands currently held by
HRG, subject to certain adjustments to account for HRG’s net debt
and transaction costs as well as a $200 million upward adjustment.
The $200 million upward adjustment takes into account that the
combination transforms Spectrum Brands into an independent public
company with no controlling shareholder and a widely held
shareholder base as well as certain favorable tax attributes of
HRG. Upon closing, Spectrum Brands shareholders will receive one
newly issued share of the combined company for each share of
Spectrum Brands that they owned prior to the combination. The
transaction is expected to be tax free to Spectrum Brands and
Spectrum Brands shareholders, and to HRG and HRG shareholders.
Following the transaction, the current Spectrum Brands
management team will lead the combined company. In addition, HRG’s
board will be replaced by the Spectrum Brands board. Ehsan Zargar
will resign from the Spectrum Brands board and will be replaced by
an independent director to be selected by Leucadia National
Corporation (“Leucadia”), HRG’s largest shareholder. Leucadia also
has an ongoing right to designate one director, so long as it owns
at least 10% of the number of combined company’s shares issued and
outstanding as of the closing, which is initially expected to be
the current Spectrum Brands’ director and Leucadia’s Chairman,
Joseph Steinberg. Pro forma for the reverse stock split, the merger
and the adjustments described above, Leucadia is expected to hold
approximately 13% of the combined company and another 45% of the
combined company is expected to be widely held by HRG’s legacy
stockholders. Such ownership percentages assume approximately $324
million of HRG’s net debt at closing and are based on the number of
shares outstanding and market prices as of February 22, 2018 (but
are subject to adjustment for HRG’s actual amount of net debt,
transaction costs and outstanding shares at closing).
“We are pleased to have reached this mutually-beneficial
agreement with HRG,” said Terry Polistina, Chairman of the Special
Committee of Spectrum Brands. “Under this new ownership structure,
Spectrum Brands will be an independent company with a widely
distributed shareholder base and improved governance structure. We
believe this transaction will deliver substantial value to all
Spectrum Brands shareholders, including the company’s minority
shareholders, and we look forward to the current Spectrum Brands’
management team advancing our growth and success."
“I want to thank the special committee for their work in
negotiating this transaction with HRG, which will result in an
independent company with meaningfully increased trading liquidity
in our common stock,” said David Maura, Executive Chairman of
Spectrum Brands. “Spectrum Brands is making substantial progress in
its ongoing, rapid transformation, including the planned
reallocation of approximately $3.6 billion of gross capital. We are
excited to emerge as a faster-growing, higher-margin company with a
meaningfully stronger balance sheet and the flexibility to
strategically redeploy a large amount of capital through share
repurchases and highly accretive acquisitions, as opportunities
present themselves. We remain poised to deliver stronger organic
growth across our organization and build upon our near 10-year
track record of serving our investors with exceptional shareholder
value creation. We have come a long way over the last decade, and
the team couldn’t be more excited about the future of Spectrum
Brands and our ability to serve our customers, employees and our
stakeholders like never before.”
“We believe this agreement represents a constructive outcome for
Spectrum Brands, HRG and all shareholders,” said Joseph Steinberg,
Chairman of the Board and Chief Executive Officer of HRG. “The
transaction advances the wind down of the HRG parent company and
eliminates its overhead. Importantly, the combination with Spectrum
Brands provides our shareholders with the ability to participate in
the upside potential of the combined company.”
“With this transaction, we are unlocking value for HRG
shareholders and providing them with enhanced liquidity going
forward. We want to express our sincere gratitude to the HRG board
and our employees, both past and present, for all of their
contributions to the success of HRG. Since 2011, their talent and
dedication helped build strong businesses, and enabled HRG to
deliver maximum value to our shareholders,” said Ehsan Zargar,
Executive Vice President, Chief Operating Officer, General Counsel
and Corporate Secretary of HRG.
Timeframe to Completion
The transaction is expected to close by the end of the second
calendar quarter of 2018. Closing of the transaction remains
subject to the satisfaction of customary closing conditions,
including the approval of both the holders of a majority of
Spectrum Brands’ outstanding shares and the holders of the majority
of such shares held by persons other than HRG and its affiliates
and the executive officers of Spectrum Brands. Closing is also
subject to the approval of a majority of HRG’s outstanding shares.
HRG has entered into a voting agreement with respect to the
Spectrum Brands vote. Leucadia and Fortress Investment Group, which
together own approximately 40% of HRG’s common shares,
enthusiastically support the transactions and have entered into
customary voting agreements to vote their shares of HRG in favor of
the transaction. The parties do not anticipate needing any
regulatory approvals in connection with the transaction.
The combined company will be named Spectrum Brands Holdings,
Inc. and will trade under the ticker “SPB.” The company will remain
headquartered in Middleton, Wisconsin.
Other Transaction Terms
Spectrum Brands’ board has approved a short-term shareholder
rights plan, effective today. The plan is intended to ensure that
the Spectrum Brands board can protect all shareholder interests as
it executes the changes announced today by preserving the value of
the combined company’s substantial net operating and capital loss
carryforwards. The plan is not intended to prevent any action that
the Spectrum Brands board determines to be in the best interests of
the company.
HRG’s board has approved a shareholder rights plan, effective
today. The plan is intended to ensure that the HRG board can
protect all shareholder interests as it executes the changes
announced today by preserving the value of the combined company’s
substantial net operating and capital loss carryforwards. The plan
is not intended to prevent any action that the HRG board determines
to be in the best interests of the company.
Batteries and Appliances Sale Processes
The combination with HRG will not have an impact on the
previously announced pending sale of Spectrum Brands’ global
battery business to Energizer Holdings, Inc. It will also not have
an impact on Spectrum Brands’ previously announced exploration of
alternatives for its appliances business, which has received strong
interest from potential buyers with an expected agreement and
closing by the end of fiscal year 2018. In total, Spectrum Brands
expects to receive $3.6-$3.7 billion in gross proceeds, including
$2 billion from the sale of Spectrum Brands’ global battery
business and $1.6-$1.7 billion from the sale of its appliances
business.
Advisors
Moelis & Company LLC is serving as financial advisor to the
Special Committee and Kirkland & Ellis LLP and Cleary Gottlieb
Steen & Hamilton LLP are serving as its legal advisors.
J.P. Morgan Securities LLC and Jefferies LLC are serving as
financial advisors to HRG and Davis Polk & Wardwell LLP is
serving as its legal advisor.
About Spectrum Brands Holdings, Inc.
Spectrum Brands Holdings, a member of the Russell 1000 Index, is
a global and diversified consumer products company and a leading
supplier of consumer batteries, residential locksets, residential
builders’ hardware, plumbing, shaving and grooming products,
personal care products, small household appliances, specialty pet
supplies, lawn and garden and home pest control products, personal
insect repellents, and auto care products. Helping to meet the
needs of consumers worldwide, our Company offers a broad portfolio
of market-leading, well-known and widely trusted brands including
Rayovac®, VARTA®, Kwikset®, Weiser®, Baldwin®, National Hardware®,
Pfister®, Remington®, George Foreman®, Black + Decker®, Tetra®,
Marineland®, Nature’s Miracle®, Dingo®, 8-in-1®, FURminator®, IAMS®
and Eukanuba® (Europe only), Healthy-Hide®, Digest-eeze™,
Littermaid®, Spectracide®, Cutter®, Repel®, Hot Shot®, Black Flag®,
Liquid Fence®, Armor All®, STP® and A/C PRO®. Spectrum Brands’
products are sold in approximately 160 countries. For more
information, visit www.spectrumbrands.com.
About HRG Group, Inc.
HRG Group, Inc. is a holding company that conducts its
operations through its operating subsidiaries. As of December 31,
2017, the Company’s principal operating subsidiary was Spectrum
Brands, a global branded consumer products company. HRG is
headquartered in New York and traded on the New York Stock Exchange
under the symbol HRG. For more information on HRG, visit:
www.HRGgroup.com.
Additional Information and Where You Can Find It
In connection with the proposed transaction, Spectrum Brands and
HRG will file with the Securities and Exchange Commission (the
“SEC”) a registration statement on Form S-4 that will include a
joint proxy statement of Spectrum Brands and HRG and that also will
constitute a prospectus for the HRG shares being issued to Spectrum
Brands’ stockholders in the proposed transaction. Spectrum Brands
and HRG also may file other documents with the SEC regarding the
proposed transaction. This press release is not a substitute for
the joint proxy statement/prospectus or registration statement or
any other document which Spectrum Brands and HRG may file with the
SEC. INVESTORS AND SECURITY HOLDERS OF SPECTRUM BRANDS AND HRG ARE
URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE
FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
security holders may obtain free copies of the registration
statement and the joint proxy statement/prospectus (when available)
and other documents filed with the SEC by Spectrum Brands and HRG
through the web site maintained by the SEC at www.sec.gov or by
contacting the investor relations department of Spectrum Brands and
HRG at the contact information listed below.
This press release is for informational purposes only and shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. This press release is not
a substitute for the prospectus or any other document that Spectrum
Brands and HRG may file with the SEC in connection with the
proposed transaction. No offering of securities shall be made,
except by means of a prospectus meeting the requirements of Section
10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
Spectrum Brands, HRG and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding Spectrum Brands’ directors and executive
officers, including a description of their direct interests, by
security holdings or otherwise, is contained in Spectrum Brands’
Form 10-K for the year ended September 30, 2017, as amended, which
is on file with the SEC. Information regarding HRG’s directors and
executive officers, including a description of their direct
interests, by security holdings or otherwise, is contained in HRG’s
Form 10-K for the year ended September 30, 2017, which is filed
with the SEC. A more complete description will be available in the
registration statement on Form S-4 and the joint proxy
statement/prospectus.
Forward-Looking Statements
Certain matters discussed in this press release may be
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We have tried, whenever
possible, to identify these statements by using words like
“future,” “anticipate,” “intend,” “plan,” “estimate,” “believe,”
“expect,” “project,” “forecast,” “could,” “would,” “should,”
“will,” “may,” and similar expressions of future intent or the
negative of such terms. These statements are subject to a number of
risks and uncertainties that could cause results to differ
materially from those anticipated as of the date of this
release. Actual results may differ materially as a result of
(1) the ability to consummate the announced transaction on the
expected terms and within the anticipated time period, or at all,
which is dependent on the parties’ ability to satisfy certain
closing conditions, including the required shareholder approvals;
(2) any delay or inability of the combined company to realize the
expected benefits of the transaction; (3) changes in tax laws,
regulations, rates, policies or interpretations; (4) the value of
the combined company shares to be issued in the transaction; (5)
the risk of unexpected significant transaction costs and/or unknown
liabilities; (6) potential litigation relating to the proposed
transaction; (7) the outcome of Spectrum Brands’ previously
announced transaction to sell the Global Battery and Lighting
Business and exploration of strategic options for Spectrum Brands’
Appliances business, including uncertainty regarding consummation
of any such transaction or transactions and the terms of such
transaction or transactions, if any, and, if consummated, Spectrum
Brands’ ability to realize the expected benefits of such
transaction; (8) the impact of actions taken by significant
stockholders; (9) the impact of expenses resulting from the
implementation of new business strategies, divestitures or current
and proposed restructuring activities; (10) the potential
disruption to Spectrum Brands’ or HRG’s business or diverted
management attention, and the unanticipated loss of key members of
senior management or other employees, in each case as a result of
the announced transaction, the previously announced transaction to
sell Spectrum Brands’ Global Battery and Lighting Business, in
connection with the strategic options for Spectrum Brands’
Appliances business or otherwise; and (11) general economic and
business conditions that affect the combined company following the
transaction. Risks that could cause actual risks to differ from
those anticipated as of the date hereof include those discussed
herein, those set forth in the combined securities filings of
Spectrum Brands and SB/RH Holdings, LLC, including their most
recently filed Annual Report on Form 10-K, and those set forth in
the securities filings of HRG, including its most recently filed
Annual Report on Form 10-K.
Spectrum Brands also cautions the reader that undue reliance
should not be placed on any forward-looking statements, which speak
only as of the date of this release. Spectrum Brands
undertakes no duty or responsibility to update any of these
forward-looking statements to reflect events or circumstances after
the date of this report or to reflect actual outcomes.
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Spectrum Brands Holdings, Inc.Investor/Media Contact:Dave
Prichard608-278-6141orJonathan Keehner / Adam PollackJoele Frank,
Wilkinson Brimmer Katcher212-355-4449orHRG Group,
Inc.Investor RelationsTel: 212.906.8555Email:
investorrelations@HRGgroup.com
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