Oct 18 2006
Jacuzzi Brands Inc (West Palm Beach, FL, USA) has announced that a definitive merger agreement has been
signed under which affiliates of private equity firm Apollo Management LP will purchase Jacuzzi Brands in a transaction having a total value of US$1.25 billion, which includes the assumption of outstanding debt approximating US$260 million, net of cash.
Under the terms of the merger agreement, Jacuzzi Brands' shareholders will receive US$12.50 per share in cash. The transaction will be financed through a combination of equity contributed by Apollo and debt financing. The Board of Directors of Jacuzzi Brands has approved the merger agreement and has recommended to Jacuzzi Brands' shareholders that they vote in favour of the transaction. In connection with the proposed transaction, Jacuzzi Brands will make a cash tender offer for all of its outstanding 9.625% Senior Secured Notes due 2010.
Thomas Waldin, Chairman of Jacuzzi Brands, commented: "In the year since we put Al Marini in charge of our overall operations, he and his team have made significant progress in improving the Bath segment and further
strengthening Zurn's leadership position. During this period there has been a significant increase in our share price, and these business advances allow for a transaction that offers a further premium for the benefit of our
shareholders".
Larry Berg, a Senior Partner at Apollo said: "We are excited to be partnering with George M. Sherman, Non-Executive Chairman of Rexnord Corporation and former President and CEO of Danaher Corporation, in the
acquisition of Jacuzzi Brands and look forward to supporting Al Marini and his management team in continuing the success of the Company. Upon completion of the merger, George will assume the role of Non-Executive
Chairman of Jacuzzi Brands and will be a co-investor with Apollo in this transaction".
Al Marini, President and CEO of Jacuzzi Brands, said: "This is an exciting time for the employees, customers, and suppliers of Zurn and the Jacuzzi Bath and Spa businesses. With the resources of Apollo and the experience brought by George Sherman, we will be well positioned to develop and implement cutting-edge strategies to build upon our already strong leadership positions. I want to stress to our customers and suppliers
that they can expect to continue to receive the same high levels of service, product quality, and innovation they have enjoyed for many years".
George Sherman said: "Jacuzzi Brands brings two attractive operating segments to Apollo's portfolio: Zurn, a leader in the domestic commercial water management industry, and Jacuzzi, a global leader in branded bath, spa and shower products. I look forward to working with Al Marini and his management teams in both operating segments to build upon the strong positions they have achieved in their respective markets".
The acquisition is subject to certain closing conditions, including the approval of Jacuzzi Brands' shareholders, regulatory approval and the receipt by Apollo of all necessary debt financing, and is expected to close in the first quarter of 2007. In addition, it is contemplated that the Zurn business will be transferred to an Apollo portfolio company, Rexnord Corporation, following the close of this transaction at a price determined through negotiations between Rexnord and the Apollo affiliates that have agreed to purchase Jacuzzi Brands.
The bath business will become an independent portfolio company of Apollo. Certain members of Jacuzzi Brands' management, including Al Marini, are expected to remain with the businesses after the closing.
Lazard Freres & Co LLC advised Jacuzzi Brands on this transaction and provided a fairness opinion to the Board of Directors of Jacuzzi Brands. Credit Suisse served as advisor to Apollo.