Subscribe for 33¢ / day

Spectrum Brands is about to become more independent.

The Middleton-based company, with over 100 years of history in Dane County, announced Monday that it is combining with its biggest shareholder, HRG Group Inc. The deal, valued at $10 billion, will leave Spectrum with no controlling shareholder.

The transaction, expected to close by the end of June, will not have an impact on the previously announced pending sale of Spectrum Brands’ global battery business to Energizer Holdings, or its previously announced exploration of sale alternatives for its appliances business, company officials said.

HRG, a New York-based holding company, owns about 59 percent of Spectrum, according to a December filing with the Securities & Exchange Commission. The deal has been approved by a special committee of independent directors for the Spectrum Brand board of directors and by both boards from Spectrum and HRG.

“Under this new ownership structure, Spectrum Brands will be an independent company with a widely distributed shareholder base and improved governance structure,” said Terry Polistina, chairman of Spectrum’s special committee. “We believe this transaction will deliver substantial value to all Spectrum Brands shareholders, including the company’s minority shareholders, and we look forward to the current Spectrum Brands’ management team advancing our growth and success.”

Under the terms of the agreement, HRG will issue a reverse stock split in which HRG shareholders receive in the aggregate a number of shares of the combined company equal to the number of shares of Spectrum currently held by HRG. Spectrum shareholders will receive one newly issued share of the combined company for each share of Spectrum that they owned before the combination.

Dave Prichard, a spokesman for Spectrum, said the deal effectively dissolves HRG and will have “no impact” on Spectrum operations or employment in Wisconsin.

“It’s business as usual,” Prichard said. “We’ve been negotiating with them for many months on how to merge HRG into Spectrum Brands through a shares agreement. Our stock will be more freely traded. We think that’s a positive because it allows more shareholders to buy Spectrum Brands stock. There’s more float,” or number of shares available for trading.

Spectrum, whose brands include Rayovac and George Foreman, will continue to be called Spectrum Brands Holdings Inc. and trade under the ticker “SPB,” and remain headquartered in Middleton. The company has 18,000 employees worldwide, which includes about 1,200 employees in Wisconsin. About 670 work at its Middleton headquarters, with 300 in Fennimore who make AA and AAA alkaline batteries and 225 employees in Portage who produce hearing-aid batteries.

“Spectrum Brands is making substantial progress in its ongoing, rapid transformation,” said David Maura, Spectrum’s executive chairman. “We are excited to emerge as a faster-growing, higher-margin company with a meaningfully stronger balance sheet and the flexibility to strategically redeploy a large amount of capital through share repurchases and highly accretive acquisitions, as opportunities present themselves.”

Spectrum expects to receive up to $3.7 billion in gross proceeds, including $2 billion from the sale of its global battery business and up to $1.7 billion from the sale of its appliances business.

Rayovac was founded in Madison in 1906 as the French Battery Co. In its early years, there were two battery plants in Madison, with others added around the state. Battery manufacturing in Madison ended in 1998, but in the early 2000s, Rayovac diversified into other industries beyond batteries and flashlights. They included Remington Products, with electric shavers and hair care appliances, in 2003, followed in 2005 by United Industries Corp., a lawn care and pet supplies company. The George Foreman and Black & Decker small kitchen appliances businesses were acquired in 2010, and hardware businesses came on board in 2012 and 2014. Armored AutoGroup joined Spectrum Brands in 2015.

The company, housed for decades on Madison’s West Side, moved into new offices at 3001 Deming Way, Middleton, in 2013.

Monday’s deal with HRG means the current Spectrum management team will lead the combined company, and HRG’s board will be replaced by the Spectrum board. The company announced that Ehsan Zargar will resign from the Spectrum board and will be replaced by an independent director to be selected by Leucadia National Corp., HRG’s largest shareholder. Leucadia also has an ongoing right to designate one director, so long as it owns at least 10 percent of the number of the combined company’s shares. That position is expected to be retained by Spectrum Brands’ director and Leucadia’s Chairman, Joseph Steinberg.

“We believe this agreement represents a constructive outcome for Spectrum Brands, HRG and all shareholders,” Steinberg said. “The transaction advances the wind-down of the HRG parent company and eliminates its overhead. Importantly, the combination with Spectrum Brands provides our shareholders with the ability to participate in the upside potential of the combined company.”

The Associated Press contributed to this story.

Get news headlines sent daily to your inbox


(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.

Thanks for reading. Subscribe or log in to continue.