Spectrum Batteries Deal Electrifies Energizer (ENR) Shares

Energizer’s (NYSE: ENR) stock gained 15 percent Tuesday after it announced an agreement to acquire Spectrum Brands' (NYSE: SPB) Spectrum Batteries unit, including Varta and Rayovac brands.

The $2 billion transaction is expected to deliver modest accretion to Energizer's earnings per share and free cash flow in the first year, with additional favorable impacts as synergies are realized.

"The acquisition of Spectrum Batteries represents a compelling strategic, operational, and financial fit for Energizer," said Energizer’s CEO Alan R. Hoskins. "The combination will enable us to leverage Spectrum Brands' manufacturing assets, significantly expand our international business and enhance our long-term brand building capabilities as we broaden our portfolio …”

The deal was also viewed favorably by Spectrum brands shareholders.

Wells Fargo analyst Sam Reid noted that the batteries unit wasn’t likely to be a growth engine for Spectrum, and he will be happy to see the company redeploy capital into faster growing segments. He also views deal terms as "very attractive."

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