Resideo Technologies to acquire First Alert for US$593M
Resideo Technologies announced Monday that it has entered into a definitive agreement to acquire First Alert Inc., a provider of home safety products, from Newell Brands Inc. for US$593 million in an all-cash transaction, or approximately US$547 million net of expected future tax benefits.
First Alert was established in 1969 and based in Aurora, Ill. The company employs more than 2,800 people and its operations include manufacturing in Juarez, Mexico, and a primary distribution facility in El Paso, Tex.
First Alert products include smoke alarms, carbon monoxide (CO) alarms, combination alarms, connected fire and CO devices, and fire extinguishers and other suppression solutions. Its products are available via retail and e-commerce, as well as through company relationships with distributors and homebuilders.
“The addition of First Alert to the Resideo portfolio provides a highly complementary extension of our existing sensor solutions in the home,” said Jay Geldmacher, CEO, Resideo, in a statement.
For the year ended Dec. 31, 2021, First Alert generated approximately US$395 million of sales and adjusted EBITDA of approximately US$55 million.
Resideo is targeting US$30 million in annual cost synergies by the end of 2023 from the integration of manufacturing and distribution operations, and general operational and business support efficiency efforts.
Resideo expects to realize approximately US$46 million in net present value of tax benefits as a result of making a joint election with Newell under Section 338(h)(10) of the Internal Revenue Code, which treats the majority of the transaction as an asset purchase for tax purposes. Net of the present value of the anticipated acquired tax benefits and including expected cost synergies, the purchase price represents a multiple of approximately 6.4x 2021 adjusted EBITDA.
The transaction is expected to be completed in the first quarter of 2022, and is subject to customary closing conditions, including receipt of applicable regulatory approvals.