(Reuters) -U.S. lock maker Spectrum Brands Holdings Inc said on Wednesday it would sell its hardware and home improvement division to Swedish rival Assa Abloy for $4.3 billion in cash.
Shares in Spectrum rose 18% after the company said it would use the proceeds to reduce debt and make complementary acquisitions.
The deal would also allow Spectrum to sharpen focus on its pet care, home & garden, and home and personal care units, with Chief Executive David Maura saying the downsized company would have higher growth rates and strong margins.
For Assa Abloy, the deal would help the company expand beyond its commercial business in North America into residential space. Spectrum’s Lake Forest, California-based hardware and home improvement division houses brands such as Kwikset, Baldwin and Weiser.
Demand for home improvement products has soared during the COVID-19 pandemic as people, largely staying at home due to the health crisis, poured money into minor remodeling and repair works at their homes.
Net sales at Spectrum’s hardware and home improvement unit increased 48.8% from a year earlier to $419 million in the third quarter ended July 4, boosted by a launch of new products.
The deal, expected to close in the fourth quarter, would immediately add to Assa Abloy’s earnings and around 14% to its consolidated sales.
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