Resideo Technologies Inc. and Snap One Holdings Corp. announced an agreement through which Resideo will acquire Snap One for $10.75 per share in cash. The transaction is valued at approximately $1.4 billion, inclusive of approximately $460 million of Snap one debt. When the deal closes, which the companies said they expect to happen in the second half of 2024, Snap One will integrate into Resideo’s ADI Global Distribution business.
“The transaction will combine ADI’s strong position in security products distribution and Snap One’s complementary capabilities in the smart living market and innovative Control4 technology platforms, which is expected to drive increased value for integrators and financial returns,” a joint statement from the companies said. “Together, ADI and Snap One will provide integrators an increased selection of both third-party products and proprietary offerings through an extensive physical branch footprint augmented by industry-leading digital capabilities.”
How integrators will benefit
The companies stated they expect the deal to provide specific value for integrators, saying they “will benefit from significant synergy on go-to-market with Snap One’s e-commerce expertise and integrator support platforms and ADI’s 195 stocking locations and extensive digital capabilities.” They added they expect the combination to “create a true omni-channel experience for integrators, simplifying the buying experience and enhancing product availability. Additional opportunity exists to enhance value within the Control4 integrator base through increasing service levels, rapid product fulfillment and expanding exclusive offerings.”
They also jointly described the following benefits the transaction will produce.
Strong position across multiple categories—Combining Snap One’s capabilities for smart-living integrators with ADI’s position in security-products distribution “will allow the combined organization to materially deepen relationships with integrators to better serve customers and expand their businesses,” they said.
Expansion of proprietary offering—The combination will “meaningfully 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,” Resideo and Snap One stated. They added the combined company “intends to leverage increased opportunities around innovation to drive value for integrators through a pipeline of proprietary products.” Proprietary products, which generally carry higher gross margin than third-party products, represented two-thirds of Snap One’s sales in 2023.
Details for Wall Street
The companies’ joint statement included the following financial and other details of the Wall Street variety.
- They expect the transaction to be accretive to Resideo non-GAAP earnings per share in the first full year.
- The $1.4-billion transaction value is a 7.4x multiple on Snap One’s EBITDA for the 12 months that ended December 29, 2023.
- Hellman & Friedman LLC, which manages funds holding approximately 72% of outstanding common shares of Snap One, have consented to the merger in writing, which satisfies the required stockholder approval.
- The transaction will be funded by proceeds from committed debt financing, cash on hand, and a $500-million perpetual convertible preferred equity investment from Clayton, Dubilier & Rice LLC.
