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Rayovac to Acquire United Industries
Jan 4, 2005
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Rayovac Corp., a manufacturer of batteries and Remington shavers, announced that it has reached an agreement to acquire United Industries Corporation. The transaction calls for Rayovac to issue 13.75 million shares of its common stock, along with additional consideration of U.S. $70 million in cash, to United Industries' current shareholders, for a total value of approximately $1.2 billion, including the assumption of approximately $880 million of United Industries debt and a cash tax benefit of $140 million.

Rayovac said the acquisition extends its household products offerings into the lawn and garden and specialty pet supply categories, while leveraging the company's operational expertise and existing relationships with global retailers.

Privately held United Industries, based in St. Louis, MO, U.S., is a manufacturer and marketer of consumer products for lawn and garden care and household insect control, operating as Spectrum Brands in the United States and NuGro in Canada. United also holds a leading position in the U.S. pet supply market, manufacturing and marketing premium branded specialty pet supplies. United estimates total 2004 pro forma sales of $950 million (assumes acquisitions made during 2004 were part of United's results for the entire 12 months) to customers such as The Home Depot, Lowe's, Wal-Mart, PETCO, and PETsMART.

"Rayovac's publicly stated goal has been to grow through acquisitions that diversify and increase our revenue base while leveraging our global merchandising and distribution capabilities. United Industries is just such an acquisition," said David A. Jones, Rayovac's chairman and CEO. "Upon closing, we will have a significant presence in several new consumer products markets -- large growth categories where we can capitalize on our strengths with major retailers to leverage the full potential of the powerful combined enterprise."

The company noted that the United transaction will significantly diversify Rayovac's revenue base. It is expected that after closing, worldwide battery sales will represent approximately 40 percent of total combined pro forma revenue versus the current level of approximately 67 percent.

"This is a truly transforming transaction for Rayovac," Mr. Jones noted, "representing a major step forward toward our goal of achieving annual revenues of $3 billion."

According to a Reuters report, the deal continues Rayovac's move away from a battery business that has been its primary focus for nearly all of its 98 years in business. Though it saw 12-percent sales growth in batteries during its last fiscal year, it drew stronger results from its Remington shaving division, which accounted for 19 percent of the company's net sales last year.

The transaction is subject to approval under the Hart-Scott-Rodino Anti-trust Improvements Act and other customary closing conditions. Rayovac said that its current expectations are that the transaction will be slightly accretive to earnings before synergies in year one. The company's initial expectations anticipate gross synergies approximating $70 to $75 million (before one-time costs) to be realized throughout a 3-year period. Anticipated cost savings include efficiencies to be gained through rationalization of manufacturing, global purchasing, distribution, and information technology.

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