UNITED INDUSTRIES CORP - 8-K - 20050104 - EXHIBIT_99
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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