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Lifetime Brands to acquire Filament Brands

U.S.-based housewares company Lifetime Brands Inc. said Dec. 22 that it signed a definitive agreement to acquire housewares company Filament Brands in a cash-and-stock transaction valued at $313 million.

Filament Brands is owned by private equity firm Centre Partners Management LLC. It recorded approximately $178 million in revenue in the 12 months ended in September, according to the merger news release. The transaction value is based on the Dec. 21 closing price of Lifetime Brands' shares and represents a pro forma adjusted EBITA multiple of roughly 6.3x, Lifetime said, including the effect of the net present value of inherited tax attributes.

Lifetime did not disclose the exact amount of the cash payment associated with the deal but said it plans to finance the payment through the proceeds of a newly committed $275 million senior secured term loan and a $150 million new asset-backed loan. The cash payment is slated to repay Filament's preferred equity holders, finance other obligations associated with the transaction and repay certain outstanding debt.

For the stock portion of the transaction, Lifetime will issue new shares to Filament's equity holders that will be equal to 27% of Lifetime's shares on a fully diluted basis, net of the new shares. After the completion of the acquisition, Filament's shareholders will enter a mandatory lock-up and standstill agreement for the Lifetime shares received.

The transaction is expected to be completed in the first half of 2018, subject to shareholder approval and customary closing conditions.

After completion of the transaction, Filament CEO Rob Kay will serve as CEO of Lifetime, while Jeffrey Siegel — the current chairman and CEO of Lifetime — will serve as executive chairman of the company. The acquisition will also expand the number of members in the company's board to 13 directors, with Kay and two representatives of Centre Partners — Bruce Pollack and Michael Schnabel — joining the board.

Sawaya Partners and Houlihan Lokey are serving as financial advisers to Lifetime in the transaction, while Morgan, Lewis & Bockius LLP is acting as the company's legal adviser. Harris Williams & Co. is acting as financial adviser for Filament, with Paul Weiss Rifkind, Wharton & Garrison LLP is acting as legal adviser.