Resideo to acquire Snap One for $10.75 per share

Resideo (REZI) and Snap One (SNPO) announced a definitive agreement pursuant to which Resideo has agreed to acquire Snap One for $10.75 per share in cash, for a transaction value of approximately $1.4B, inclusive of net debt. Upon closing, Snap One will integrate into Resideo’s ADI Global Distribution business. The transaction will combine ADI’s position in security products distribution and Snap One’s complementary capabilities in the smart living market and innovative Control4 technology platforms, which is expected to drive increased value for integrators and financial returns. Together, ADI and Snap One will provide integrators an increased selection of both third-party products and proprietary offerings through an extensive physical branch footprint augmented by industry leading digital capabilities. The transaction is expected to be accretive to Resideo non-GAAP EPS in the first full year of ownership, with revenue growth and margin profile to ADI and Resideo as a whole. Transaction financing has been structured to allow Resideo to preserve financial flexibility for future strategic initiatives. The transaction is valued at approximately $1.4B, including forecasted net debt of Snap One at the closing of approximately $460M. This represents a 7.4x multiple on Snap One’s adjusted EBITDA for the twelve months ended December 29, 2023, as further adjusted by including Resideo’s projected annual run-rate synergies of $75M. The transaction is expected to be completed in the second half of 2024, and is subject to customary closing conditions, including receipt of applicable antitrust and other regulatory approvals. The transaction has been unanimously approved by the boards of directors of Resideo and Snap One. Private investment funds managed by Hellman & Friedman LLC, holding approximately 72% of the outstanding common shares of Snap One, have executed a written consent to approve the merger, thereby providing the required stockholder approval for the transaction. Resideo intends to use proceeds from committed debt financing, cash on hand, and a $500M perpetual convertible preferred equity investment from Clayton, Dubilier & Rice to fund the transaction. Terms of the CD&R investment include a 7% coupon, payable in cash or payment-in-kind at Resideo’s option, and a conversion price of $26.92. Effective upon the closing, CD&R will have the right to designate two members to the Board of Directors of Resideo.