Spectrum Brands Inc. (NYSE:SPC) is set to receive its first round of
bids for its pet supply business which is expected to fetch in excess
of $1 billion. The segment is said to have had $543 million in net
sales in 2006 with an EBITDA around $100 million, according to sources
close to the situation.
The diversified retailer said it would
divest the business after several shareholders complained that the
company had overleveraged itself to make a series of acquisitions. The
divesture also follows the company's move to sell its lawn, garden and
insect control businesses last year when it hired Goldman Sachs to
explore alternatives.
Currently, Spectrum has yet to sell any of
its business segments but shareholders are hoping that this first deal
- which accounts for 21% of the company's overall sales - will help
spark interest in others and improve the company's suffering financial
condition.
In the end, this is great news for shareholders as it
means more cash on the balance sheet, less debt, and much greater
flexibility. Spectrum's plan to divest all of its mis-guided
acquisitions is a move that could finally help shareholders unlock
value that has been hidden in this company for years. Combined, these
factors make SPC a stock worth watching!
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