Empower Brands makes $1.6B unsolicited bid for Helen of Troy

Empower Brands has made an unsolicited, non-binding proposal to buy all of Helen of Troy's outstanding common equity for $37 per share in cash. The offer implies an enterprise value of about $1.6 billion. It went public on Wednesday after the two sides failed to agree privately.

Empower Brands is a joint venture of Spectrum Brands and Oaktree Capital Management, and its portfolio includes Black+Decker and Remington. An affiliate of the bidder already owns about 4.5% of Helen of Troy's outstanding shares, according to the press release.

Helen of Troy operates the Hydro Flask, Osprey and OXO brands, among others. It did not immediately respond to Retail Dive's request for comment, so the board's position is so far known only through the bidder's account of the failed private talks.

"We believe our all-cash proposal offers Helen of Troy's shareholders compelling and certain value at an attractive premium," said David Maura, chairman and chief executive of Spectrum Brands and chairman of Empower Brands, in a statement.

Maura added that rather than engaging on a transaction, Helen of Troy tried to halt any process by requiring an overly restrictive agreement. He said it would limit Empower Brands' ability to communicate its offer to Helen of Troy shareholders.

He also said the bidder remains willing to enter a constructive dialogue that could support an improved proposal and lead to a friendly transaction. That leaves open the possibility of a higher price than $37.

How the private talks unfolded

Empower Brands began engaging privately with Helen of Troy in July about its acquisition interest. It increased its initial proposal in October and asked for a discussion between the financial advisers of both companies.

Late last month, Bank of America, which works for Helen of Troy, told UBS, Empower Brands' adviser, that sharing any information would be subject to a confidentiality agreement. According to a Securities and Exchange Commission filing on Wednesday, the agreement would restrict the bidder from publicly disclosing its interest and proposal.

Empower Brands says Helen of Troy's board has overseen "the destruction of substantial shareholder value through a series of operational, financial and strategic failures." It listed the share price decline over the past five years and the company's acquisition decisions as part of its case.

The jointly owned consumer products group believes a combination with Helen of Troy's portfolio would be complementary and would improve operational efficiency. The release did not put a figure on any savings.

The results behind the bid

Helen of Troy's second-quarter net sales rose 2.1% year over year to $440.9 million, according to a release last month. Gains in home and outdoors were partly offset by a weaker beauty and wellness division.

The company swung from a net loss of $308.6 million in the same quarter last year to net income of $4.6 million. Against that recovery, the bidder is arguing that the board has failed shareholders over the longer run.

The proposal is non-binding, so Helen of Troy is under no obligation to engage. The sources give no deadline for a response, and the premium the $37 price represents to the recent share price was not stated.

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Image: Helen of Troy