Resideo to Acquire First Alert for $593M
Resideo says the acquisition of First Alert advances its strategy of expanding the company’s presence with contractors and broadening its suite of sensors for the home.
SCOTTSDALE, Ariz. — Resideo Technologies (NYSE: REZI) announces it has entered into a definitive agreement to acquire First Alert, a provider of home safety products, from Newell Brands for $593 million in an all cash transaction, or approximately $547 million net of expected future tax benefits.
First Alert is a separate entity than 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.
Established in 1969 and based in Aurora, Ill., First Alert is a leader in the home safety market with a strong omni-channel presence serving end users directly through retail and e-commerce channels and professional contractors through relationships with distributors and homebuilders, according to the announcement.
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 addition of First Alert to the Resideo portfolio provides a highly complementary extension of our existing sensor solutions in the home,” says 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.”
First Alert has over 2,800 employees and its operations include manufacturing in Juarez, Mexico, and a primary distribution facility in El Paso, Texas.
For the year ended Dec. 31, 2021, First Alert generated approximately $395 million of sales and adjusted EBITDA of approximately $55 million.
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.
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.
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