Resideo to Acquire First Alert for $593M

Resideo Technologies, Inc. (NYSE: REZI) has entered into a definitive agreement to acquire First Alert, Inc. from Newell Brands Inc. (Nasdaq: NWL) for $593 million in an all cash transaction, or approximately $547 million net of expected future tax benefits.

Established in 1969 and based in Aurora, Ill., First Alert is one of the most recognizable security brands among consumers, selling directly through retail and e-commerce channels and professional contractors through relationships with distributors and homebuilders. 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, and fire extinguishers and other suppression solutions. Products are marketed through the First Alert, BRK and Onelink brands.

The company is credited with selling the first battery-powered smoke detector. First Alert is not to be confused with First Alert Professional Security Systems, which was a brand of security control panels that had licensing rights to the First Alert brand name and was manufactured by Ademco and later Honeywell.

“The addition of First Alert to the Resideo portfolio provides a highly complementary extension of our existing sensor solutions in the home,” comments 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.”

Resideo / First Alert Financial 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 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.

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.

Resideo is a leading global manufacturer and distributor of technology-driven products and solutions that provide comfort, security, energy efficiency and control to customers worldwide. Building on a 130-year heritage, Resideo has a presence in more than 150 million homes, with 15 million systems installed in homes each year. We continue to serve more than 110,000 professionals through leading distributors, including our ADI Global Distribution business, which exports to more than 100 countries from nearly 200 stocking locations around the world. For more information about Resideo, please visit www.resideo.com.

Newell Brands (NASDAQ: NWL) is a leading global consumer goods company with a strong portfolio of well-known brands, including Rubbermaid, FoodSaver, Calphalon, Sistema, Sharpie, Paper Mate, Dymo, EXPO, Elmer’s, Yankee Candle, Graco, NUK, Rubbermaid Commercial Products, Spontex, Coleman, Campingaz, Contigo, Oster, Sunbeam and Mr. Coffee. Newell Brands’ beloved, planet friendly brands enhance and brighten consumers lives at home and outside by creating moments of joy, building confidence and providing peace of mind.

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