Technology manufacturer and distributor Resideo Technologies, Inc. has entered into an agreement to acquire Snap One Holdings Corp. for US$1.4 billion or US$10.75 per share in cash. Upon closing, Snap One would integrate into Resideo’s ADI Global Distribution business. Snap One is also the parent company to Staub Electronics.
The transaction will combine ADI’s position in security products distribution and Snap One’s capabilities in the smart living market and Control4 technology platforms. Together, ADI and Snap One will provide integrators with an increased selection of third-party products and proprietary offerings through a physical branch footprint augmented by digital capabilities. Snap One acquired Staub Electronics in January 2022.
“The acquisition of Snap One is an exciting step in Resideo’s continued transformation through portfolio optimization, operational enhancements, and structural cost savings actions,” says Jay Geldmacher, Resideo’s President and CEO. “ADI and Snap One are highly complementary businesses and together will meaningfully enhance our strategic and operational capabilities as a significant player in attractive growth categories. We are excited about the enhanced value proposition through increased product breadth, local availability, support services and broad market expertise, as well as the future opportunities this creates for integrators serving residential and commercial markets.
“In addition,” Geldmacher adds, “the investment by Clayton, Dubilier & Rice is a testament to the strategic and financial merits of this transaction and provides financial flexibility as we continue to transform and optimize our portfolio. We look forward to the ADI and Snap One teams working together to drive value for all stakeholders through executing on the substantial business and financial synergies we see in combining the two businesses.”
“Snap One has grown from a start-up built by entrepreneurial integrators to an industry leader in smart technology, delivering seamless experiences to consumers and high-quality services and support to our integrators,” adds John Heyman, CEO of Snap One. “This is the right next step to capture new opportunities to bring our solutions to market. The future of smart living is here. Demand for connected technology products continues to grow, and Resideo is the right owner to drive our expansion. We believe this transaction will deliver compelling value to our stakeholders and will create opportunities for our people and integrator partners.”
“We are excited to support Resideo on this highly strategic acquisition and in their ongoing transformation,” continues Nathan Sleeper, CD&R’s CEO. “I look forward to joining Resideo’s Board of Directors and supporting the business as it executes on this transaction and the significant opportunity we see available over the coming years.”
Resideo says that the acquisition will combine Snap One’s capabilities for smart living integrators with ADI’s complementary position in adjacent security products distribution. This cross-category expansion will allow the combined organization to deepen relationships with integrators, help them better serve their customers, and expand their businesses.
The combination is expected to accelerate ADI’s existing exclusive brands strategy, leveraging Snap One’s proprietary product portfolio and product development expertise while providing broader availability through ADI’s network of commercial and residential integrators and omni-channel capabilities. The combined company intends to leverage increased opportunities around innovation to drive value for integrators through a pipeline for proprietary products. Snap One generated 66% of sales from proprietary products in 2023 and these offerings typically carry significantly higher gross margin than third-party products.
The transaction is expected to be accretive to Resideo non-GAAP EPS in the first full year of ownership, with favourable 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 US$1.4 billion, including forecasted net debt of Snap One at the closing of approximately US$460 million. This represents a 7.4-times multiple on Snap One’s Adjusted EBITDA for the 12 months ended December 29, 2023, as further adjusted by including Resideo’s projected annual run-rate synergies of $75 million.
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 is a global manufacturer and developer of technology-driven products and components that provide comfort, energy management, and safety and security solutions. Through its ADI Global Distribution business, the company is also a wholesale distributor of professionally installed electronic security and life safety products for commercial and residential markets and serves a variety of adjacent product categories including audio visual, data communications, and smart home solutions.
Snap One empowers its network of professional integrators to deliver entertainment, connectivity, automation, and security solutions to residential and commercial end users worldwide. Snap One distributes a portfolio of proprietary and third-party products through its online portal and local branch network, blending e-commerce with same-day pickup. The company provides software, support, and digital workflow tools to help its integrator partners.