Spectrum Brands Holdings, Inc. SPB is looking to vend its Global Batteries & Appliances (“GBA”) businesses and plans to divest these assets in 2018. This divestiture plan is in sync with the company’s strategy of allocating capital efficiently through organic investments and acquisitions. Consequently, the company plans to redirect the capital invested in the GBA business to develop its remaining four businesses, including Hardware & Home Improvement, Global Auto Care, Global Pet Supplies and Home & Garden.
Management plans to use the proceeds from the asset sale for debt reduction, reinvestment in core businesses both organically and via strategic buyouts; as well as share buybacks.
The company believes in the strength of both the Global Batteries & Appliances businesses and notes that these segments have significantly contributed to its long-term growth. The company stated that it is in talks with various potential buyers regarding the sale of these assets. Further, it believes these businesses have strong upside potential and are likely to grow under the stewardship of new owners.
Notably, the segment delivered net sales of $1,998 million, contributing nearly 40% to the company’s total sales of $5,007 million in fiscal 2017. Further, the division recorded operating income of $231 million and adjusted EBITDA of $317 million, while the company’s overall operating income and adjusted EBITDA came in at $561 million and $956 million, respectively.
The company also stated that the segment will be classified as held for sale and reported as discontinued operations effective the first quarter of fiscal 2018 ending on Dec 31, 2017.
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Following this news, shares of Spectrum Brands increased 8.8%. Further, this Zacks Rank #3 (Hold) stock has gained 15% in the past three months against the industry’s decline of 4.3%.
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