Resideo Technologies, Inc., a global provider of home comfort and security solutions and distributor of commercial and residential security and audio-visual products, announces that it has entered into a definitive agreement to acquire First Alert, Inc., a provider of home safety products, from Newell Brands Inc. for $593 million in an all-cash transaction, or approximately $547 million net of expected future tax benefits.
Home safety market
Established in 1969 and based in Aurora, Illinois, First Alert is a pioneer in the home safety market with a strong omnichannel presence serving end-users directly through retail and e-commerce channels and professional contractors through relationships with distributors and home builders.
First Alert offers a comprehensive portfolio of detection and suppression devices including smoke alarms, carbon monoxide (CO) alarms, combination alarms, connected fire and CO devices, fire extinguishers, and other suppression solutions. Products are marketed through the First Alert, BRK, and Onelink® brands.
Significant operational synergies
We see significant operational synergies with First Alert's strength in retail and relationships"
"The addition of First Alert to the Resideo portfolio provides a highly complementary extension of our existing sensor solutions in the home," commented Jay Geldmacher, Resideo CEO. "Not only does First Alert bring a leading brand and market position in home safety, but its products also occupy a highly strategic position on the ceiling.
"We see significant operational synergies with First Alert's strength in retail and relationships with leading homebuilders and Resideo's strong partnership with professional contractors and distributors. First Alert advances our strategy of expanding Resideo's presence with contractors and broadening our suite of sensors for the home."
Financial and Closing Details
- For the year ended December 31, 2021, First Alert generated approximately $395 million of sales and adjusted EBITDA of approximately $55 million.
- Resideo is targeting $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 $46 million in the 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.
- First Alert has over 2,800 employees and its operations include manufacturing in Juarez, Mexico, and a primary distribution facility in El Paso, Texas.
- 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.
Fourth-Quarter financial results
For the quarter ended December 31, 2021, Resideo's preliminary expectations include revenue of $1.454 billion, gross margin of 27.2%, and operating profit of $141 million.
Resideo will release full fourth quarter and full-year 2021 financial results after the close of the New York Stock Exchange on Tuesday, February 15, and host a webcasted conference call at 5 p.m. ET. Additional details on the acquisition will be provided at that time.
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