ASSA ABLOY sought the sale following antitrust concerns from the Department of Justice over its acquisition of Spectrum Brands’ Hardware and Home Improvement business.
DEERFIELD, Ill. — Fortune Brands Home & Security, an industry-leading home and security products company, announces it has entered into a definitive agreement to acquire the Emtek and Schaub premium and luxury door and cabinet hardware business, as well as the U.S. and Canadian Yale and August residential smart home locks business from ASSA ABLOY.
The transaction is valued at $800 million, or approximately $700 million net of tax benefits, in cash on a cash-free, debt-free basis, subject to customary adjustments.
“This acquisition is perfectly aligned to our strategy as a brand, innovation and channel leader. Yale and August will bring two great brands and significant engineering expertise into our already powerful security portfolio. Emtek and Schaub allow us to enter a branded, growing and highly profitable category in a leadership position, where we can accelerate innovation and leverage our channel and consumer insights to create significant value over time,” says Fortune Brands CEO Nicholas Fink. “This transaction is consistent with Fortune Brands’ disciplined approach to value-creating acquisitions.”
ASSA ABLOY’s luxury door and cabinet hardware and residential smart lock businesses recorded revenues of approximately $350 million in 2021. Fortune Brands says it expects to add meaningful growth and cost synergies to the businesses over time.
“Together with our existing iconic brands, loyal channel relationships, and supply chain expertise, we believe these additions will result in enhanced, innovative products for consumers and customers. We can accelerate growth and profitability by deploying our Fortune Brands Advantage capabilities to create value for all stakeholders,” adds Fink.
Fortune Brands expects to receive tax benefits over a 15-year period with a net present value of approximately $100 million, and the net purchase price of $700 million equates to approximately 7.8x estimated 2022 adjusted EBITDA for the businesses before synergies.
The acquisition is conditioned on the successful closing of the acquisition by ASSA ABLOY from Spectrum Brands of its Hardware and Home Improvement business following a favorable resolution of the court proceedings with the Department of Justice.
In September, the DOJ filed a civil antitrust lawsuit to block ASSA ABLOY’s proposed $4.3 billion acquisition, citing the merger would eliminate important head-to-head competition between ASSA ABLOY and Spectrum, risking higher prices, lower quality, reduced innovation and poorer service in the sale of at least two types of residential door hardware.
In an effort to assuage the DOJ’s concerns, ASSA ABLOY later announced it had initiated a sales process of its Emtek and Yale smart residential business in the U.S. and Canada.
“With Fortune Brands our excellent U.S. and Canadian residential businesses will get a good and strong home with an experienced owner. While keeping these residential businesses in the U.S. and Canada would have been preferred, we are confident that we have now fully eliminated all competitive concerns alleged by the DOJ and that the acquisition of HHI is in the long-term interest of our shareholders,” says Nico Delvaux, president and CEO of ASSA ABLOY.
The Fortune Brands acquisition is expected to close in the second quarter of 2023.