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Salton enters pet goods market, increases debt levels
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By Chris Nicholls
MIRAMAR, FLORIDA: Small appliances giant Salton has added another company to its stable, with the acquisition of pet goods company United Pet Group from Remington owner Spectrum Brands Inc. for approximately US$692.5 million.
The deal, paid for in cash with the addition of $98 million in Spectrum variable rate toggle senior subordinated notes and $124.5 million in senior subordinated notes, will be funded by an equity investment provided by Salton’s controlling stockholders, Harbinger Capital. Harbinger will also contribute the Spectrum notes to Salton as part of the deal.
United Pet Group (UPG) has a broad line of consumer and commercial aquatics products, including integrated aquarium kits, standalone tanks and stands, filtration systems, heaters, pumps, fish food and water treatment products. Its largest aquatics brands are Tetra, Marineland, Whisper, Jungle and Instant Ocean.
UPG also sells a variety of specialty pet products, including dog and cat treats, small animal food and treats, clean up and training aid products, health and grooming aids, and bedding products.
The business has grown consistently in recent years and posted revenues of $563 million in the year ended 30 September 2007. Salton said it expects to integrate its existing LitterMaid self-cleaning cat litter box business into UPG, strengthening its position in that market.
While the pet goods lines add to Salton’s portfolio, the US$692.5 million needed for the purchase appears to put the company further into debt. It has already told investors in its recent quarterly report it was “highly leveraged”, and while the report stated it repaid US$150 million of its debt obligations, it also listed US$205 million in accounts payable and senior debt obligations as of 31 March. Term loans came to approximately US$130 million.
Adding to this, Salton also stated they had received a financing commitment for credit facilities totalling $325 million, although the United Pet Group was not apparently contingent on any financing requirement.
Salton president and chief executive, Terry L. Polistina, said “Over the past five months, we have successfully integrated the Salton and Applica businesses, and we are now ready to take the next step in enhancing our range of product offerings and market reach. The addition of the United Pet Group establishes Salton as one of the leading providers of specialty pet supplies. UPG is well positioned for continued success with strong market positions, diversified product offerings and established customer relationships. We believe there are many opportunities to continue to leverage our core competency in electronics within the specialty pet business using UPG’s brands and global distribution channels.”
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[Thu 22/05/2008 01:35:40]
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