Get Adobe Flash player

Lifetime Brands to Acquire Filament Brands

Lifetime Brands, Inc.  and Filament Brands have entered into a definitive agreement under which Lifetime will acquire Filament, a portfolio company of private equity firm Centre Partners, in a cash and stock transaction. Based upon the closing price of Lifetime common stock on December 21, 2017, the transaction values Filament at an enterprise value of approximately $313 million, which represents a pro forma adjusted EBITDA multiple of approximately 6.3 times, inclusive of synergies and the effect of the net present value of inherited tax attributes.
After the closing, Lifetime will have an enhanced portfolio of products with top positions in key product areas, a diversified customer base with marquee partnerships and a robust product development team and pipeline. With approximately $178 million in revenue in the latest 12-month period ended September 2017, Filament offers top brands that combine longstanding heritage with best-in-class product development and design, including Rabbit, Chef’n, Taylor, Salter and Springfield. By adding Filament’s marketing and consumer engagement capabilities to Lifetime’s expertise in sales, ecommerce, sourcing and information technology infrastructure, Lifetime will be strongly positioned to deliver and develop more products for more customers around the world.

“We are pleased to welcome the Filament business, brands and people to Lifetime,” said Jeffrey Siegel, Lifetime’s Chairman and Chief Executive Officer. “This transaction brings together two highly complementary companies and positions Lifetime with the scale, brands and capabilities to compete and win in today’s dynamic global environment. Filament has firmly established itself as a leader of high-end design and innovation in the branded consumer products sector. With its attractive positions in non-traditional, high-growth channels, Filament will help extend Lifetime’s reach into important new segments and create new opportunities for our business. This transaction represents a significant milestone for our company, our shareholders and our customers, and we are confident that joining forces gives us the opportunity to accelerate our growth plans and create value for all our stakeholders.”

Siegel continued, “Rob Kay is a seasoned executive with more than 20 years of experience building and running companies. I look forward to working closely with Rob, and I am confident that he is the right person to lead Lifetime upon closing to capitalize on the significant  opportunities ahead.”

“Over the past five years, we structured our best-in-class design, engineering, operations and marketing to drive innovation and offer products that are stylish and functionally relevant,” said Rob Kay, Chief Executive Officer of Filament Brands. “Today’s announcement is a testament to our relentless customer focus and to the hard work of our talented creative and professional teams. Together with Lifetime, with its robust sales, ecommerce, sourcing and IT infrastructure, we’ll be able to bring even more great ideas to market and drive significant value creation over the long-term. Lifetime is a company I have known and admired, and I look forward to continuing to grow the business, investing in its world-class brands and creating opportunities for the tremendously talented people of both companies.”

Strategic and Financial Benefits of Transaction

Increased Scale and Infrastructure to Expand Revenue and Margins: The transaction will create a company with a significantly expanded and more efficient global footprint, including leadership positions and strengthened operations, sales, sourcing, IT, ecommerce and research and development platforms. The result is a transformed company that is uniquely positioned to bring high-margin products to new markets, and drive new and deeper customer relationships and enhanced profitability. Lifetime’s robust, industry-leading sales infrastructure will further enable deep retailer and consumer relationships across an expanded global footprint.

Lifetime is committed to continuing to invest in research and development and product innovation, which it expects will grow stronger with the addition of Filament’s expertise and development capabilities. Furthermore, the company’s significantly enhanced financial position and resources will enable it to further invest in its best-in-class brands, including product development and marketing opportunities, generating short- and longer-term growth, including internationally.

Enhanced Product Portfolio and Best-in-Class Innovation Engine: The acquisition will extend Lifetime’s reach into important new home products segments and bolster the company’s industry-leading design capabilities with the addition of Filament’s best-in-class product
development and design expertise. With the addition of Filament, Lifetime will have more than 1,000 patents worldwide across over 20 brands and 27 categories, including top positions in kitchenware, tableware, kitchen and bath measurement, portable beverage and barware. With
an enhanced product development engine, Lifetime expects to accelerate the creation of new products that anticipate consumer demands across various price points and geographies. The company’s expanded ecommerce capabilities and strengthened retailer relationships will
ensure that Lifetime’s expanded product portfolio reaches even more customers in attractive markets around the world.

Highly Diversified Customer Base: Lifetime and Filament have highly complementary customer bases, serving overlapping accounts with distinct product offerings. By bringing together two diversified customer bases and channel mixes, Lifetime will have stronger key partnerships with blue-chip retailers, including Amazon, Walmart, Costco and Starbucks. No customer will represent more than 15 percent of sales. Furthermore, with the addition of Filament, Lifetime will be able to offer unique trend forecasting abilities that retailers increasingly rely on to
provide consumer preference insights and points of differentiation.

Strong Financial Profile to Drive Future Growth: With the acquisition of Filament, Lifetime will have an enhanced financial profile, with expected pro forma net sales of approximately $770 million and pro forma EBITDA of more than $85 million. At the close, Lifetime is expected to have a net debt / EBITDA ratio of less than 4.0 times, with the company expected to reach its target net debt / EBITDA ratio of below 3.0 times within two years of close as a result of the significant free cash flow generation.

Lifetime expects the transaction to be meaningfully accretive in the first full year after close. In addition, Lifetime expects the transaction to be accretive to EBITDA margins by approximately 400 basis points.

Substantial Cost-Savings: The integration of Lifetime and Filament is expected to generate $8 million of annual run-rate cost synergies in the first year after the close of the transaction. Actions to capture these savings include supply chain consolidation, sales and marketing
efficiencies and elimination of overlapping back office functions.

Headquarters, Management and Board of Directors

Lifetime will continue to be headquartered in Garden City, New York, with a significant presence in Seattle, Washington, and will maintain its regional facilities around the world. Upon completion of the transaction, Rob Kay, CEO of Filament, will become CEO of Lifetime. Jeffrey Siegel, currently Chairman and CEO of Lifetime Brands, will become Executive Chairman of the Company. Daniel Siegel will remain President of the company and Ronald Shiftan will remain Vice Chairman of the Board. In conjunction with the closing of the transaction, Kay and two representatives of Centre Partners, Bruce Pollack and Michael Schnabel, will join the company’s board, which will expand to 13 directors.

Transaction Terms and Financing

Based upon the closing price of Lifetime common stock on December 21, 2017, the transaction is valued at $313 million, a multiple of 6.3 times, including estimated synergies and the present value of inherited tax attributes, and consists of a combination of cash and common stock. Lifetime will issue to Filament’s equity holders at closing newly-issued shares representing 27 percent of Lifetime Brands common stock
on a fully diluted basis after accounting for the issuance of additional shares. Lifetime will also pay an agreed amount of cash, which is expected to be used to (x) repay preferred equity holders, (y) fund other transaction-related obligations, and (z) repay certain outstanding debt.

Lifetime intends to fund the cash portion with proceeds obtained from a newly committed $275 million senior secured term loan and a $150 million new asset based loan. At the completion of the transaction, Filament’s equity holder will enter into a customary lock-up and standstill agreement for the Lifetime shares it receives.


The transaction, which is expected to close in the first half of 2018, is subject to, among other things, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Lifetime shareholder approval, and other customary closing conditions.

Jeffrey Siegel, Daniel Siegel, Clifford Siegel and Ronald Shiftan, who collectively own approximately 11 percent of the outstanding stock of Lifetime, have entered into voting agreements in support of the transaction.

Kitchenware News