Spectrum Brands jumps after reaching settlement with DOJ on Assa Abloy deal (NYSE:SPB)
Spectrum Brands (NYSE:SPB) jumped 13% in after hours trading after reaching a settlement with the Dept. of Justice in regard to Assay Abloy’s planned acquisition of its door hardware unit. The settlement puts an end to the court proceedings in the U.S. District Court for the District of Columbia.
Spectrum Brands (SPB) agreed to a stipulation with the DOJ to settle the DOJ’s challenge of Assa Abloy’s acquisition of the company’s Hardware and Home Improvement segment, according to a statement on Friday.
The DOJ sued to block the Swedish company from acquiring the door hardware unit for $4.3 billion from Spectrum Brands (SPB) back in September. Spectrum Brands’ shares soared 27% on Dec. 2 after Assa announced an agreement to sell some assets to Fortune Brands Home & Security (FBIN) for $800 million to try to remedy the DOJ’s concern
In connection with the settlement and pursuant to the proposed final judgement filed with the court on Friday, Assa Abloy will proceed with the divestment of Emtek and the Smart Residential business in the U.S. and Canada to Fortune Brands.
“We are very pleased to have reached agreement with the DOJ, which is a critical milestone toward putting HHI in the hands of Assa Abloy, who we believe will enhance HHI’s ability to bring consumers better innovation and product choice,” Spectrum Brands (SPB) CEO David Maura said in the statement.
The settlement comes after the DOJ trial to block the sale of the door hardware unit started April 24, though the trial was delayed twice this week and was scheduled to resume on Monday with no explanation given, sending Spectrum Brands (SPB) shares up 6.4% over the past two days.
Approval of the Mexican competition authority is the only outstanding regulatory approval. Spectrum Brands (SPB) continues to expect to close this transaction on or prior to June 30.
In March Raymond James analyst Olivia Tong wrote that she expects Spectrum Brand (SPB) shares to see a “strong” positive reaction if the deal was to go through.
Chris DeMuth Jr, Partner of Rangeley Capital, told Seeking Alpha last month that he sees upside for Spectrum Brands (SPB) to $80-$90 a share if the deal were allowed to pass.
Fortune Brands (FBIN) announced in a separate statement Friday that it planned to proceed with the acquisition of the Emtek and Schaub premium and luxury door and cabinet hardware business, and the U.S. and Canadian Yale and August residential smart home locks business from Assa Abloy that it originally agreed to purchase in early December.
For the remainder of 2023, the acquisition of the door and hardware businesses is expected to generate net sales of $190 million to $210 million and earnings per share of $0.02 to $0.04, Fortune Brands said.