Emtek and Schaub to be Acquired by Fortune Brands
May 8, 2023
This article was originally posted on Dec. 2, 2022; it was updated May 8, 2023.
Fortune Brands Home & Security, Inc. (“FBHS,” “Fortune Brands” or the “Company”), an industry-leading home and security products company, announced it has entered into a definitive agreement to acquire the Emtek (its Galapagos design is pictured above) and Schaub premium and luxury door and cabinet hardware business and the U.S. and Canadian Yale and August residential smart home locks business (collectively the “Business”) from ASSA ABLOY, Inc. (a subsidiary of ASSA ABLOY AB), for a purchase price of $800 million, or approximately $700 million net of tax benefits, in cash on a cash-free, debt-free basis, subject to customary adjustments (collectively, the “Acquisition”).
“This Acquisition is perfectly aligned to our strategy as a brand, innovation and channel leader. Yale and August will bring two great brands and significant engineering expertise into our already powerful security portfolio. Emtek and Schaub allow us to enter a branded, growing and highly profitable category in a leadership position, where we can accelerate innovation and leverage our channel and consumer insights to create significant value over time,” said Fortune Brands CEO Nicholas Fink. “This transaction is consistent with Fortune Brands’ disciplined approach to value-creating acquisitions.”
“Together with our existing iconic brands, loyal channel relationships, and supply chain expertise, we believe these additions will result in enhanced, innovative products for consumers and customers. We can accelerate growth and profitability by deploying our Fortune Brands Advantage capabilities to create value for all stakeholders,” added Fink.
With revenues of approximately $350 million in 2021, the Business is comprised of leadership brands in the fast-growing smart lock and the highly profitable and growing premium and luxury hardware categories. Fortune Brands expects to add meaningful growth and cost synergies to the Business over time.
Fortune Brands expects to receive tax benefits over a 15-year period with a net present value of approximately $100 million, and the net purchase price of $700 million equates to approximately 7.8x estimated 2022 adjusted EBITDA for the Business before synergies.
The Acquisition agreement, which was first announced on December 1, 2022, was conditioned on the successful resolution of litigation among the Department of Justice, ASSA ABLOY, Inc. and Spectrum Brands, Inc. On May 5, 2023, the Department of Justice, ASSA ABLOY, Spectrum Brands and Fortune Brands resolved the lawsuit, which awaits final statutorily required approval from the Court overseeing the matter, which is expected to be received in short order. With the lawsuit settled, this allows Fortune Brands to proceed with the Acquisition.
Fortune Brands’ closing of the Acquisition is conditioned on the successful closing of the Hardware and Home Improvement business transaction between Spectrum Brands and ASSA ABLOY. Fortune Brands anticipates its transaction will close on or before June 30, 2023.
Fortune Brands will retain the Business’ associates and locations as it further assesses how best to fully integrate them into Fortune Brands’ organization. The Company expects to include financial performance for Yale and August as part of Fortune Brands’ Security reporting segment, and to include Emtek and Schaub financial results as part of the Company’s Water Innovations reporting segment.
Fortune Brands plans to host a conference call prior to the close of the transaction to provide stakeholders with additional information.
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