NEW YORK--(BUSINESS WIRE)--Griffon Corporation (NYSE:GFF) has entered into a definitive agreement to acquire ClosetMaid Corporation, a market leader of home storage and organization products, from Emerson (NYSE:EMR) for $260 million. After taking into account tax benefits resulting from the transaction, the effective purchase price is $225 million.
“We are proud to add ClosetMaid to our family of iconic brands including AMES, True Temper, and Clopay,” said Ronald J. Kramer, Griffon’s Chief Executive Officer. “ClosetMaid complements and diversifies our portfolio of leading consumer brands and products. This acquisition expands our existing footprint in home centers and expands our customer relationships to include the direct to builder and mass merchant, specialty and hardware channels. ClosetMaid’s industry-leading closet organization, home storage, and garage storage products make it a terrific addition to Griffon’s Home and Building Products segment.”
The acquisition is expected to be financed through cash on hand, availability on our revolving credit facility, and/or through committed debt financing which is expected to be in the form of a senior notes offering. The acquisition is subject to customary closing conditions and is expected to close by the end of September 2017.
Griffon and Emerson will make a joint election under Section 338(h)(10) of the Internal Revenue Code, permitting the transaction to be treated as an asset purchase for tax purposes. This election will generate a tax benefit with an estimated present value of $35 million for Griffon and its shareholders.
The acquisition of ClosetMaid will be immediately accretive to cash flow and earnings. In the first full year of operations, Griffon expects ClosetMaid to contribute $300 to $315 million in revenue and between $0.08 and $0.10 in earnings per share. Griffon’s effective purchase price is approximately 7.1 to 7.5 times expected EBITDA for the fiscal year ending September 2018.
Separately, Griffon announced that after having received from qualified parties unsolicited inquiries to acquire Clopay Plastic Products Company (“Clopay Plastics”), Griffon will explore strategic alternatives for Clopay Plastics. A global leader in the development and production of specialty plastic films for hygienic, health-care and industrial products, Clopay Plastics has operations in North America, Brazil, and Germany. During the trailing 12-month period ending June 30, 2017, Clopay Plastics generated $468 million of revenue and $53 million of Segment adjusted EBITDA.
“Clopay Plastics is a well-recognized, trusted provider of specialty plastic films. It has an 83-year legacy of innovation and technical leadership, a state-of-the-art manufacturing base with global reach, outstanding personnel, and long-term relationships with blue-chip customers,” said Mr. Kramer. “Given the unique aspects of the Clopay Plastics business, Griffon is evaluating approaches to increase long-term value for our shareholders while providing enhanced opportunities for growth and value creation for Clopay Plastics and its customers.”
Goldman, Sachs & Co. LLC is acting as financial advisor to Griffon for its acquisition of ClosetMaid from Emerson, and will assist the company with exploring strategic alternatives for Clopay Plastics. Deutsche Bank has provided committed financing for the acquisition of ClosetMaid. Dechert is acting as Griffon’s legal counsel for both the acquisition of ClosetMaid and the potential strategic actions with Clopay Plastics.
About Griffon Corporation
Griffon is a diversified management and holding company that conducts business through wholly-owned subsidiaries. Griffon oversees the operations of its subsidiaries, allocates resources among them and manages their capital structures. Griffon provides direction and assistance to its subsidiaries in connection with acquisition and growth opportunities as well as in connection with divestitures. In order to further diversify, Griffon also seeks out, evaluates and, when appropriate, will acquire additional businesses that offer potentially attractive returns on capital.
