08:44 AM EDT, 04/15/2024 (MT Newswires) -- Resideo Technologies ( REZI ) on Monday agreed to acquire smart-living products company Snap One ( SNPO ) in a deal worth $1.4 billion, including debt.

The home safety and security products maker will pay $10.75 per share in cash for Snap One ( SNPO ). The deal includes Snap One's ( SNPO ) estimated net debt of about $460 million at closing, with Resideo ( REZI ) planning to integrate the company into its ADI global distribution business.

The transaction, which requires approval from regulators, is expected to be completed in the second half. Private investment funds managed by Hellman & Friedman, which own 72% of Snap One's ( SNPO ) stock, have given their approval for the deal. Shares of Snap One ( SNPO ) surged 30% in premarket activity while Resideo ( REZI ) gained nearly 5%.

"The acquisition of Snap One ( SNPO ) is an exciting step in Resideo's ( REZI ) continued transformation through portfolio optimization, operational enhancements and structural cost savings actions," Chief Executive Jay Geldmacher said in a joint statement. "ADI and Snap One ( SNPO ) are highly complementary businesses and together will meaningfully enhance our strategic and operational capabilities as a significant player in attractive growth categories."

The companies aim to combine Snap One's ( SNPO ) capabilities in the smart living market with the ADI division's position in security products distribution, to provide increased value of third-party products and proprietary offerings for integrators. In the fourth quarter of 2023, the ADI global distribution segment logged revenue of $854 million, down from $867 million in the prior-year period, Resideo ( REZI ) reported in February.

Resideo ( REZI ) plans to finance the acquisition with proceeds from committed debt financing, cash on hand and a $500 million investment from Clayton, Dubilier & Rice. In exchange, the private equity firm will be allowed to designate two members to Resideo's ( REZI ) board of directors. The investment from Clayton, Dubilier & Rice provides "financial flexibility," according to Geldmacher.

"Demand for connected technology products continues to grow, and Resideo ( REZI ) is the right owner to drive our expansion," Snap One ( SNPO ) CEO John Heyman said. "We believe this transaction will deliver compelling value to our stakeholders and will create opportunities for our people and integrator partners."

Resideo ( REZI ) anticipates the deal to be accretive to its adjusted earnings on a per-share basis in the first full year of ownership of the firm, with revenue growth to the ADI distribution business and the company as a whole.