The U.S. Department of Justice and ASSA ABLOY reached a settlement late Friday that will allow the access control giant’s $4.3 billion acquisition of Spectrum Brands Holdings Hardware and Home Improvement division to proceed.
The settlement, which is subject to court approval, directs ASSA ABLOY to divest assets to Fortune Brands Innovations “that are designed to allow Fortune to compete in the market for premium mechanical door hardware and smart locks used in residential and multifamily buildings,” the DOJ said.
The assets include ASSA ABLOY’s Emtek and Schaub premium mechanical door hardware business, its Yale and August residential smart-lock businesses in the U.S. and Canada, and “other assets for multifamily smart-lock applications” in those two countries.
Additional settlement terms include expanding Fortune’s intellectual property and commercialization rights in smart locks, inclusion of additional residential mechanical lock assets, and the appointment of a monitoring trustee.
Additionally, there is a penalty provision for delayed transfer of a manufacturing facility, and the ability for the DOJ “to seek additional relief later if the divestiture fails to maintain the intensity of competition that existed before the merger” for smart locks used in residential and multifamily buildings.
The proposed settlement, along with a competitive impact statement, will be published in the Federal Register, as required by the Tunney Act. After a 60-day comment period, a federal judge can enter the final judgement if it’s determined the settlement is in the public interest.
The settlement must also gain approval from the Mexican competition authority. The transaction is expected to close by the end of June barring any other legal roadblocks.
The DOJ said in September it would sue to block the $4.3 billion acquisition of HHI by ASSA ABLOY on antitrust grounds. DOJ alleged the merger would risk higher prices, lower quality, reduced innovation and poorer service in at least two types of residential door hardware: premium mechanical door hardware and smart locks.
In response, ASSA ABLOY said it was preparing to sell its Emtek and Yale smart residential business in the U.S. and Canada in response to the complaint.
“The settlement with DOJ is an important milestone towards closing of the HHI acquisition, which will empower us to increase investments in the residential segments, realize the synergies of MUSD 100 and strengthen our product offering for the benefit of consumers,” said Nico Delvaux, President and CEO of ASSA ABLOY, in a statement.
ASSA ABLOY AB sells its residential door hardware products in the U.S. under the August, EMTEK, and Yale brands. Spectrum Brands Holdings, headquartered in Middleton, Wis., sells residential hardware in the U.S. under the Baldwin and Kwikset brands.
Deerfield, Ill.-based Fortune Brands Innovation sells various products for the home under the Moen, Fiberon and MasterLock brands, among others.
Spectrum Brands CEO David Maura said the agreement is a “a critical milestone toward putting HHI in the hands of ASSA ABLOY, who we believe will enhance HHI’s ability to bring consumers better innovation and product choice.”
Fortune said it will go ahead with the purchase of businesses from ASSA ABLOY for $800 million.
“Our company is a great home for these world-class brands; we see many opportunities to build them within our portfolio,” said Fortune Brands Chief Executive Officer Nicholas Fink. “We believe this acquisition will result in enhanced, innovative products for consumers and customers. This meaningful transaction is consistent with Fortune Brands’ disciplined approach to value-creating acquisitions and our larger growth strategy.”
