Atlanta-Spectrum Brands Inc. has announced the signing of a definitive agreement to sell the Canadian division of its Nu-Gro home and garden business segment to a new company formed by RoyCap Merchant Banking Group and Clarke Inc. Financial terms were not disclosed, but Spectrum reported the transaction is expected to close by Oct. 31, subject to certain regulatory approvals. The division, described as a leading home and garden supplier in the Canadian market, had FY2006 sales of approximately $100 million across a broad range of product categories, including fertilizer, grass seed, controls, and ice melt, under brand names such as CIL, Wilson, and Alaskan Ice Melter. Spectrum CEO Kent Hussey commented, “The Canadian division of our home and garden business segment is a valuable business that enjoys strong consumer recognition, a national distribution network and a broad and loyal customer base, and we are pleased to have found in the RoyCap/Clarke partnership a buyer that is a good fit for this asset. Following the sale of this division, which was not a profit contributor in our most recent fiscal year, Spectrum’s remaining U.S.-based home and garden business will be a more sharply focused company with improved operating margins and returns on invested capital.” Net proceeds from the sale will be utilized to reduce outstanding debt, a key strategic priority for Spectrum Brands. The company currently estimates that the sale will reduce FY2008 peak seasonal borrowing needs by approximately $45 million as a result of cash proceeds from the transaction and the elimination of the working capital requirement for the Canadian home and garden business in the 2008 lawn and garden selling season.
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