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Spectrum Brands And HRG Group To Merge


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(RTTNews.com) - Spectrum Brands Holdings Inc. (SPB) and HRG Group Inc. (HRG) said that they reached a definitive merger agreement pursuant to which Spectrum Brands will combine with HRG Group.

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, and was also approved by the Spectrum Brands and HRG boards.

As per 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.

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, 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.

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.

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.

Spectrum Brands' board has approved a short-term shareholder rights plan, effective today.

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.

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 billion -$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.


Read the original article on RTTNews (http://www.rttnews.com/2866477/spectrum-brands-and-hrg-group-to-merge.aspx)

For comments and feedback: contact editorial@rttnews.com




This article appears in: Politics , World Markets , Stocks
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