SCOTTSDALE, Ariz. and CHARLOTTE, N.C. - Resideo Technologies, Inc. (NYSE: NYSE:REZI), a key player in technology-driven products, announced today its plan to acquire Snap One Holdings Corp. (Nasdaq: SNPO) for $1.4 billion, inclusive of net debt. The agreement will see Snap One, known for smart-living technology, become part of Resideo's ADI Global Distribution business.
The merger is set to strengthen Resideo's position in security, audio-visual, and smart living technology distribution for residential and commercial markets. The combined capabilities of ADI and Snap One are expected to offer professional integrators a wider selection of proprietary and third-party products, supplemented by an extensive omnichannel reach.
Jay Geldmacher, President and CEO of Resideo, expressed enthusiasm for the acquisition, highlighting the strategic and operational benefits for growth categories. He noted that the investment by Clayton, Dubilier & Rice (CD&R) underscores the strategic and financial merits of the transaction and provides financial flexibility for Resideo's ongoing transformation.
Snap One's CEO, John Heyman, remarked on the company's evolution from a startup to an industry leader and the opportunities the merger presents for bringing smart technology solutions to market.
The transaction is anticipated to be accretive to Resideo's non-GAAP EPS in the first full year of ownership. It is scheduled for completion in the second half of 2024, pending customary closing conditions and regulatory approvals. The financing for the acquisition includes committed debt, cash on hand, and a $500 million perpetual convertible preferred equity investment from CD&R, which will also gain the right to appoint two members to Resideo's Board of Directors upon closing.
Resideo also provided preliminary financial results for the first quarter ended March 30, 2024, with revenue expected to be approximately $1,485 million. The company plans to release its first quarter financial results after the New York Stock Exchange closes on May 2, 2024.
The information in this article is based on a press release.
InvestingPro Insights
In light of Resideo Technologies' recent announcement to acquire Snap One Holdings Corp., investors and industry observers are keenly looking at the company's financial health and market performance. According to InvestingPro data, Resideo boasts a market capitalization of $3.06 billion and a Price/Earnings (P/E) Ratio of 14.62, which adjusts to a more attractive 8.73 when considering the last twelve months as of Q4 2023. This suggests that the company is trading at a lower multiple of its earnings, potentially indicating value. Additionally, Resideo's revenue for the last twelve months stood at $6.242 billion, despite a slight revenue decline of 2.01% during the same period.
From an operational standpoint, Resideo has demonstrated a solid gross profit margin of 27.17% in the last twelve months up to Q4 2023. This is complemented by a robust operating income margin of 9.58%, reflecting efficient management and the potential for profitability. Notably, the company's stock has experienced a significant price uptick of 49.29% over the last six months, as per InvestingPro data, possibly reflecting investor confidence in Resideo's market strategy and growth prospects.
InvestingPro Tips for Resideo highlight the stock's volatility, which investors should consider when evaluating the company's short-term performance. However, with liquid assets surpassing short-term obligations and a strong return over the last three months, Resideo's financial stability appears sound. Analysts predict that the company will be profitable this year, and with profitability already achieved over the last twelve months, the outlook is positive.
For those considering a deeper dive into Resideo's financials and market potential, InvestingPro offers additional insights, with a total of 7 InvestingPro Tips available for the company at: https://www.investing.com/pro/REZI. Interested investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking further valuable information to inform their investment decisions.
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