(Bloomberg) -- Spectrum Brands Inc., the consumer-goods company that owns Pfister faucets and Cutter bug spray, agreed to sell its hardware and home improvement division to Swedish lockmaker Assa Abloy AB for $4.3 billion in cash.
Spectrum expects to receive net proceeds of $3.5 billion, which will be used to repay debt, reduce its leverage ratio and potentially fund future acquisitions, the company said Wednesday in a statement that confirmed an earlier report by Bloomberg News. The deal is expected to close after regulatory approvals and other customer conditions, the company said without providing a specific time frame.
The sale of the hardware unit, which includes the Kwikset lock brand, allows Middleton, Wisconsin-based Spectrum to simplify its business around its three remaining divisions -- pet care, home and garden and personal care. Stockholm-based Assa, meanwhile, is strengthening its North America presence and developing its residential business there, which Chief Executive Officer Nico Delvaux called “an important strategic step.”
Following a trading halt, Spectrum shares jumped 19% at 12:47 p.m. in New York, giving it a market value approaching $4 billion.
Assa is the world's largest lockmaker with a market capitalization of about $34.5 billion. The company has been looking to diversify its mix of products due to rising raw material costs and pandemic-related volatility.
The company, which is rated A- by Standard & Poor's, said it was committed to maintaining a strong investment grade rating after the partly debt-financed deal. Yields on its dollar bonds maturing 2029 were little changed at 2.1% following the announcement.
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