Spectrum Brands Holdings, Inc. (SPB), on Oct 2, announced that it’s Hardware and Home Improvement Group (“HHI”) has completed the pending acquisition of Tell Manufacturing, Inc. in an undisclosed all-cash transaction, well ahead of the set time-line of October-end. Earlier, the two companies signed a definitive agreement on Sep 18.
Generating annual revenues of roughly $40 million, Tell Manufacturing 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.
Tell Manufacturing’s hollow metal door producing capacities will be included in HHI’s business. Further, Tell Manufacturing’s renowned brand position will help HHI to 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 is likely to speed up HHI’s foray into the country’s commercial door hardware and lock market. It will also assist in diversifying its product line and generating significant production and cost-related synergies.
Spectrum Brands acquired HHI toward the end of 2012. Since then, HHI’s expansion into the U.S. commercial hardware market was part of the company’s strategic plans as this market enjoys robust margins on the back of distribution dynamics, product specification and recovery of commercial construction.
Spectrum Brands, which competes with The Container Store Group, Inc. (TCS) is a branded consumer products retailer. The company 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 Jarden Corp. (JAH) and Prestige Brands Holdings, Inc. (PBH), each carrying a Zacks Rank #2 (Buy).
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