Energizer Holdings Inc (NYSE:ENR) announced that it has agreed to acquire HandStands Holding Corporation (“HandStands”) from Trivest Partners for an aggregate cash purchase price of $340 million, subject to certain adjustments.
HandStands is a leading designer and marketer of automotive fragrance and appearance products. Inclusive of recent acquisitions, calendar year 2015 pro forma net sales were approximately $128 million, with approximately 80% in the U.S., and adjusted pro forma EBITDA was approximately $34 million. HandStands offers innovative products driven by deep consumer insights through well recognized brands such as Refresh Your Car!®, California Scents®, Driven®, Bahama & Co.®, LEXOL® and Eagle One®. This combination of innovative product offerings and strong category leadership has allowed HandStands to achieve consistent top-line growth in recent years and establish itself as one of the market leaders and a partner of choice for retailers in the U.S. automotive fragrance category.
“HandStands represents a compelling strategic, operational and cultural fit for Energizer,” said Alan R. Hoskins, Chief Executive Officer of Energizer. “The HandStands business is complementary to our existing business with opportunities for growth. These two businesses have similar customers, distribution channels, category management characteristics and commitment to innovation. The acquisition allows us to leverage our global battery platform and integrated supply chain network, while providing top-line and free cash flow growth, which will further enhance our ability to drive long-term shareholder value.”
Chris Anderson, Chief Executive Officer of HandStands, added: “This transaction represents an exciting milestone in HandStands’ evolution. The ability to leverage Energizer’s strong consumer insights, industry-leading innovation and global reach positions HandStands’ brands for continued growth.”
Energizer intends to ultimately fund the acquisition through a combination of approximately $250 million of existing cash and committed debt facilities. This transaction is expected to be leverage neutral to Energizer’s projected levels of Debt to EBITDA by the first quarter of Fiscal 2017. Excluding one-time transaction and integration costs, earnings accretion from the transaction in the first full fiscal year following the close is estimated to be $0.15 to $0.20 per share and free cash flow is expected to increase by at least $20 million. In addition to revenue growth potential, Energizer anticipates cost synergies of approximately $5 million to be achieved by leveraging Energizer’s global battery platform, infrastructure and supply chain network. These savings are projected to be achieved over a period of two years following the close of the acquisition.
The transaction is subject to customary closing conditions, including regulatory approvals. The acquisition is expected to close in the fourth fiscal quarter of 2016. Citi acted as exclusive financial advisor and Bryan Cave LLP acted as legal counsel to Energizer on the transaction. Sawaya Segalas & Co., LLC acted as exclusive financial advisor, and Greenberg Traurig, LLP acted as legal counsel to HandStands on this transaction. (Original Source)
Shares of Energizer Holdings closed yesterday at $44.59, up $0.41 or 0.93%. ENR has a 1-year high of $144.41 and a 1-year low of $28.86. The stock’s 50-day moving average is $43.59 and its 200-day moving average is $38.00.
On the ratings front, Energizer has been the subject of a number of recent research reports. In a report issued on May 5, Morgan Stanley analyst Dara Mohsenian reiterated a Hold rating on ENR, with a price target of $46, which represents a slight upside potential from current levels. Separately, on May 4, Jefferies Co.’s Kevin Grundy reiterated a Hold rating on the stock and has a price target of $45.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Dara Mohsenian and Kevin Grundy have a total average return of 9.1% and 2.2% respectively. Mohsenian has a success rate of 69.4% and is ranked #449 out of 3842 analysts, while Grundy has a success rate of 67% and is ranked #1128.
Overall, 2 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $46.67 which is 4.7% above where the stock closed yesterday.
Energizer Holdings, Inc. manufacturers and markets batteries and lighting products. The company’s products include household batteries, specialty batteries and portable lighting. The company is headquartered in St. Louis, MO.