Spectrum Brands Holdings, Inc. (SPB) recently announced that its Hardware and Home Improvement Group (“HHI”) has signed a deal to purchase Tell Manufacturing, Inc. in an all-cash transaction.
Generating annual revenues of roughly $40 million, Tell is one of the leading producers of commercial locks, doors and hardware in the U.S., holding a significant market share. This acquisition will give HHI a platform to extend its exclusive and patented SmartKey and Kevo residential lock technologies into developing commercial networks.
Further, Tell’s hollow metal door producing capacities will be included in HHI’s business. Tell’s renowned brand position will also help HHI gain access to products in commercial hardware and metal building distribution, various non-retail networks and other cross-selling options within its existing networks.
This acquisition, anticipated to close by October end, is likely to speed up HHI’s foray into the country’s commercial door hardware and lock market. It will also help in diversifying its product line and generating significant production and cost-related synergies.
Spectrum Brands acquired HHI toward the end of 2012. HHI’s expansion into the U.S. commercial hardware market was part of the company’s strategic plans since then, as this market enjoys robust margins on the back of distribution dynamics, product specification and recovery of commercial construction.
Spectrum Brands is a branded consumer products retailer that has been undertaking efficient cost-cutting measures with plans to implement a better pricing strategy. Also, it remains committed to generating solid free cash flows, reducing debt levels and enhancing adjusted EBITDA to boost shareholder value. With these continuous efforts, the company is likely to achieve its growth objectives and see another year of strong performance.
The company currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Hanesbrands Inc. (HBI) and Cherokee Inc. (CHKE), each carrying a Zacks Rank #1 (Strong Buy), and Prestige Brands Holdings, Inc. (PBH) with a Zacks Rank #2 (Buy).
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