Rayovac will finance its ¤415 million acquisition ofTetra Holding by drawing on an existing $500 million add-on to its U.S. and Euro denominated term loans. Bank of America leads the facility. Between its accordion and cash flow, David Jones, ceo, said in a conference call that the company does not anticipate having to draw on its revolver.
Subject to shareholder approval in April, the company will officially change its corporate name to Spectrum Brands. Once the latest deal has closed, batteries will represent just 37% of total revenues. Other large contributors are lawn and garden supplies with 20%, pet supplies with 9% and shaving and grooming with 11%.
Pet supplies is an area in which the one-time battery maker has said it will focus. "We had identified that category as one growing at a faster rate, 6-8% a year," said Nancy O'Donnell, v.p. of investor relations. "It's a very fragmented industry; no player in America has more than 7-8% marketshare. We think it is ripe for consolidation."
The company has stated that in the next three to five years it wants to double its size from $2.5 billion in revenues. Although O'Donnell said she could see the company possibly taking part in smaller acquisitions over a longer period of time within the pet supply sector, she does not expect another massive acquisition in the next two to three years.
The company has a $300 million revolver and a $540 million term loan "B" due 2012. It also has $140 million--equivalent Euro denominated senior secured term loan "B" and a $50 million--Canadian denominated senior secured term loan "B" due 2012.