Exhibit 99.1
Rayovac to Acquire United Industries
Transaction Diversifies Company into Large High-Growth Markets: Lawn & Garden,
Specialty
Pet Supplies and Household Insect Control
ATLANTA, Jan. 4, 2005 - Rayovac Corp. (NYSE:ROV), a global consumer products
company with a diverse portfolio of world-class brands, announced today that it
has reached an agreement to acquire United Industries Corporation. The
transaction calls for Rayovac to issue 13.75 million shares of its common stock,
along with additional consideration of $70 million in cash, to United
Industries' current shareholders, for a total value of approximately $1.2
billion including the assumption of approximately $880 million of United
Industries debt and a cash tax benefit of $140 million. This acquisition
extends Rayovac's household products offerings into the large and growing lawn
and garden and specialty pet supply categories, while leveraging the company's
operational expertise and existing relationships with global retailers.
Privately held United Industries, based in St. Louis, is a leading manufacturer
and marketer of consumer products for lawn and garden care and household insect
control, operating as Spectrum Brands in the United States and NuGro in Canada.
United also holds a leading position in the fragmented but fast-growing U.S. pet
supply market, manufacturing and marketing premium branded specialty pet
supplies through its United Pet Group. Among United's brands are Spectracide®,
Vigoro®, Sta-Green®, Schultz™ and C.I.L® in the lawn and garden market; Hot
Shot®, Cutter® and Repel®in the household insect control market; and
Marineland®, Perfecto® and Eight in One® among pet supply products. United
estimates total 2004 pro forma sales of $950 million (assumes acquisitions made
during 2004 were part of United's results for the entire twelve months) to
customers including The Home Depot, Lowe's, Wal-Mart, PETCO and PETsMART.
"Rayovac's publicly stated goal has been to grow through acquisitions that
diversify and increase our revenue base while leveraging our global
merchandising and distribution capabilities. United Industries is just such an
acquisition," said David A. Jones, Rayovac's chairman and chief executive
officer. "Upon closing, we will have a significant presence in several new
consumer products markets - large growth categories where we can capitalize on
our strengths with major retailers to leverage the full potential of the
powerful combined enterprise."
The company noted that the United transaction will significantly diversify
Rayovac's revenue base. It is expected that after closing, worldwide battery
sales will represent approximately 40 percent of total combined pro forma
revenue versus the current level of approximately 67 percent.
Added Jones: "This is a truly transforming transaction for Rayovac, representing
a major step forward toward our goal of achieving annual revenues of $3
billion."
"We are extremely pleased to join a company that clearly believes in our
brands, our markets and our merchandising strategy," said United Industries
Chief Executive Officer Robert L. Caulk, who is expected to join Rayovac's
senior management team. "We share Rayovac's belief that our products will
flourish as part of a larger company with an integrated global manufacturing,
distribution and information services platform and a more significant
relationship with our customers."
"The combination of Rayovac and United Industries offers a compelling value
proposition," said Thomas H. Lee Partners Co-President Scott Schoen. "United's
strong brands and history of operational excellence will be further strengthened
in combination with Rayovac's global manufacturing, distribution, supply chain
and IT infrastructure. The Rayovac management team has
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established a track record of successfully integrating acquired businesses while
maintaining marketplace momentum. Our ongoing ownership stake is a tangible
demonstration of our confidence in the future success of the combined
enterprise."
Rayovac's current expectations are that the transaction will be slightly
accretive to earnings before synergies in year one. The company's initial
expectations anticipate gross synergies approximating $70 to $75 million (before
one-time costs) to be realized over a three year period. Anticipated cost
savings include efficiencies to be gained through rationalization of
manufacturing, global purchasing, distribution and information technology. In
addition to these cost savings, Rayovac has identified a number of opportunities
to drive revenue growth through cross-selling and coordination of sales and
marketing efforts.
Transaction Details
The transaction is subject to approval under the Hart-Scott-Rodino Anti-trust
Improvements Act and other customary closing conditions. Rayovac plans to enter
into a new senior secured credit facility and issue senior subordinated notes in
connection with the acquisition. Existing United Industries debt of
approximately $900 million will be redeemed or replaced by the new credit
facility. The transaction has been approved by United's shareholders. The
transaction is expected to close in February.
United is 83 percent owned (on a fully diluted basis) by the Thomas H. Lee
Equity Fund IV, a private equity fund managed by Thomas H. Lee Partners and
affiliates (THL). It is anticipated that following the transaction THL will
hold an ownership position in Rayovac of approximately 25 percent. The shares
of Rayovac common stock received by United shareholders in the transaction will
be issued pursuant to an exemption from registration under the federal
securities laws. Rayovac has agreed to file a shelf registration within nine
months following closing to allow for the sale of such shares. As part of the
transaction, the shares issued to United shareholders will be subject to a
lockup agreement expiring one year after the closing date relative to 50 percent
of the shares and 18 months after the closing date for the remaining 50
percent. In addition, two new Class II seats will be added to Rayovac's current
eight-person board of directors, to be filled by candidates selected by the THL
shareholders.
Rayovac and THL were previously partners when THL invested in Rayovac
Corporation in 1996. THL maintained a significant interest in Rayovac until
August 2002. David Jones, Rayovac chairman and chief executive officer, was a
board member of United Industries from 1999 to 2003. Rayovac noted that an
independent committee of its board was established to evaluate, negotiate and
approve the terms of the transaction. Citigroup Global Markets Inc. served as
advisors to the independent committee of the Rayovac board of directors.
Merrill Lynch & Co. served as financial advisor to Rayovac Corporation, and
Goldman Sachs & Co. advised United Industries.
Webcast Information
Rayovac will host a conference call on Tuesday, January 4 at 8:30 a.m. EST to
discuss the United Industries acquisition. Interested investors and others can
participate on the call at 800-592-7713 (international callers at
706-679-4191). A replay of the call will be available at 800-642-1687
(international callers at 706-645-9291) under the passcode 3156577.
A simultaneous webcast of the call and an accompanying slide presentation will
be available at www.rayovac.com.
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About United Industries
United Industries Corporation, headquartered in St. Louis, is a leading
manufacturer and marketer of products for the consumer lawn-and-garden care and
household insect control markets in North America and a leading supplier of
quality products to the pet supply industry in the United States. United
Industries has 2,800 employees throughout North America.
United Industries' Home and Garden Division, which operates as Spectrum Brands,
includes the Spectracide®, Spectracide Triazicide®, Spectracide Terminate®,
Garden Safe® and Real-Kill®brands in the controls category, Sta-Green®, Vigoro®,
Schultz™, Peters®, Bandini® and Best®brands in the lawn and garden fertilizer
and organic growing media categories and Hot Shot®, Cutter® and Repel® brands in
the consumer household insecticide and insect repellent categories.
United Industries' Canada Division, which operates as Nu-Gro includes the CIL®,
Wilson®, Vigoro®, Pickseed®, So-Green®, Plant-Prod®, Greenleaf® and Green
Earth®brands in the consumer home and garden categories in Canada. Nu-Gro also
produces and distributes controlled release nitrogen and other fertilizer
technologies to the consumer, professional and golf industries worldwide under
the names IB Nitrogen®, Nitroform®, Nutralene®, Organiform® and S.C.U.®
United Industries' Pet Division, which operates as United Pet Group, or UPG,
manufactures and markets premium pet supplies products for dogs, cats, fish,
birds, and small animals. UPG markets the broadest line in the industry,
including integrated aquarium kits, stand-alone tanks, filters and filter media,
sea salt, and other aquarium supplies and accessories, as well as a variety of
pet treats and supplies. UPG's aquatics brands, which include Marineland®,
Perfecto®, and Instant Ocean®, are leading brands in their market
segments. UPG's pet supply brands include Eight in One®, Nature's Miracle®,
Dingo®, Lazy Pet®, St. Aubrey®, Wild Harvest® and One Earth™.
About Thomas H. Lee Partners, L.P.
Thomas H. Lee Partners, L.P., is a Boston-based private equity firm focused on
identifying and acquiring substantial ownership positions in growth companies.
Founded in 1974, Thomas H. Lee Partners currently manages approximately $12
billion of committed capital, including its most recent fund, the $6.1 billion
Thomas H. Lee Equity Fund V. In addition to United Industries, notable
transactions sponsored by the firm include: Warner Music Group, Refco Group,
Nortek, Simmons Company, Michael Foods, ProSiebenSat.1, American Media, AXIS
Capital Holdings Limited, Houghton Mifflin, TransWestern Publishing, National
Waterworks, Endurance Specialty Insurance, Eye Care Centers of America, Vertis,
Cott Corporation,Rayovac, Fisher Scientific International, Experian, GNC and
Snapple Beverage.
About Rayovac
Rayovac is a global consumer products company and one of the largest battery,
shaving and grooming, and lighting companies in the world. Through a diverse
and growing portfolio of world-class brands - including Rayovac, Varta and
Remington - Rayovac holds leading market positions in a number of major product
categories. The company's products are sold by 19 of the world's top 20
retailers, and are available in over one million stores in 120 countries around
the world. Headquartered in Atlanta, Georgia, Rayovac generates approximately
$1.5 billion in annual revenues and has 6,500 employees worldwide. The
company's stock trades on the New York Stock Exchange under the symbol ROV.
Certain matters discussed in this news release, with the exception of historical
matters, may be forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are subject to a
number of risks, uncertainties and other factors that could cause results to
differ materially from those anticipated as of the date of this release. Actual
results may differ materially from these statements as a result of (1) our
ability to close and finance the contemplated
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United acquisition as anticipated, (2) our ability to achieve anticipated
synergies and efficiencies as a result of this transaction, (3) changes in
external competitive market factors, such as introduction of new product
features or technological developments, development of new competitors or
competitive brands or competitive promotional activity or spending, (4) changes
in consumer demand for the various types of products Rayovac and United offer,
(5) changes in the general economic conditions where Rayovac and United do
business, such as stock market prices, interest rates, currency exchange rates,
inflation and raw material costs, (6) our ability to successfully implement
manufacturing, distribution and other cost efficiencies and (7) various other
factors, including those discussed herein and those set forth in Rayovac's and
United's securities filings, including their most recently filed Forms 10Q and
Annual Reports on Form 10-K.
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Investor Contact:
Nancy O'Donnell
VP Investor Relations
770-829-6208
cell 404-992-9001
Media Contact:
David Doolittle
Ketchum for Rayovac
404-879-9266
cell 404-840-1321
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