Resideo Technologies Inc., a manufacturer and distributor of technology-driven products and solutions, and Snap One Holdings Corp., a provider of smart-living products, services, and software to professional integrators, announced a “definitive agreement pursuant to which Resideo has agreed to acquire Snap One for $10.75 per share in cash, for a transaction value of approximately $1.4 billion, inclusive of net debt.” According to a press release Resideo sent Monday, upon closing, Snap One will integrate into Resideo’s ADI Global Distribution business.

The companies say the transaction will combine ADI’s position in security products distribution and Snap One’s capabilities in the smart living market and innovative Control4 technology platforms, which is expected to drive increased value for integrators and financial returns. 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.

“The acquisition of Snap One is an exciting step in Resideo’s continued transformation through portfolio optimization, operational enhancements and structural cost savings actions,” said Jay Geldmacher, Resideo’s president and chief executive officer. “ADI and Snap One are highly complementary businesses and together will meaningfully enhance our strategic and operational capabilities as a significant player in attractive growth categories. We are excited about the enhanced value proposition through increased product breadth, local availability, support services and broad market expertise, as well as the future opportunities this creates for integrators serving residential and commercial markets. In addition, the investment by Clayton, Dubilier & Rice is a testament to the strategic and financial merits of this transaction and provides financial flexibility as we continue to transform and optimize our portfolio. We look forward to the ADI and Snap One teams working together to drive value for all stakeholders through executing on the substantial business and financial synergies we see in combining the two businesses.”

“Snap One has grown from a startup built by entrepreneurial integrators to an industry leader in smart technology, delivering seamless experiences to consumers and high-quality services and support to our integrators,” said John Heyman, chief executive officer of Snap One. “This is the right next step to capture new opportunities to bring our solutions to market. The future of smart living is here. Demand for connected technology products continues to grow, and Resideo is the right owner to drive our expansion. We believe this transaction will deliver compelling value to our stakeholders and will create opportunities for our people and integrator partners.”

Gary Kayye, co-founder and director of THE rAVe Agency, said, “This is giant news and a fantastic move by Residio/ADI. This will create a sea-change in the CEDIA channel but will ripple through ProAV as well since both ADI and Snap One have distribution strategies in commercial AV. I suspect there is going to be a lot of overlap in what Residio/ADI already does and what Snap One does. It will be interesting to see how this might affect the Snap One team in Charlotte, N.C., its headquarters. I hope it’s minor. This may also explain why ADI divested itself of Herman, too.”

The transaction is valued at approximately $1.4 billion, including forecasted net debt of Snap One at the closing of approximately $460 million. This represents a 7.4x multiple on Snap One’s Adjusted EBITDA for the twelve months ended December 29, 2023, as further adjusted by including Resideo’s projected annual run-rate synergies of $75 million. 

The transaction is expected to be completed in the second half of 2024, and is subject to customary closing conditions, including receipt of applicable antitrust and other regulatory approvals. The transaction has been unanimously approved by the Boards of Directors of Resideo and Snap One. Private investment funds managed by Hellman & Friedman LLC, holding approximately 72% of the outstanding common shares of Snap One, have executed a written consent to approve the merger, thereby providing the required stockholder approval for the transaction.

Resideo intends to use proceeds from committed debt financing, cash on hand, and a $500 million perpetual convertible preferred equity investment from Clayton, Dubilier & Rice LLC (“CD&R”) to fund the transaction. Terms of the CD&R investment include a 7% coupon, payable in cash or payment-in-kind at Resideo’s option, and a conversion price of $26.92. Effective upon the closing, CD&R will have the right to designate two members to the Board of Directors of Resideo.

Resideo will host a conference call at 8 a.m. Eastern Time on April 15, 2024, to discuss the transaction. Interested parties may join the call via https://investor.resideo.com/, where related materials will be posted before the call, or by phone at 646-968-2525 or 888-596-4144 with the conference ID: 7959274. A replay of the webcast will be available at https://investor.resideo.com/.