Stanley to buy Black & Decker
Tool deals don't get bigger than this: Stanley plans to buy Black & Decker in an all-stock transaction valued at about $4.5 billion.
The merger of the two giants will create a new entity called Stanley Black & Decker, an $8.4 billion player in power tools, fasteners, hardware and home improvement products. The companies announced the plans Monday afternoon.
Upon closing, which is expected in the first half of 2010, Stanley shareholders will own approximately 50.5% of the equity of the combined company, and Black & Decker shareholders will own approximately 49.5%
Stanley's John Lundgren and Black & Decker's Nolan Archibald will both remain in key positions. Lundgren will be president and CEO of the combined company, while Archibald will be executive chairman of the combined company for three years.
During a conference call Tuesday morning, Lundgren and Archibald hammered on the synergies built into the merger of their two companies. CEO Lundgren described the combination of the companies as complementary and one with "virtually no overlap."
"Joining these two companies together creates a powerful engine for growth, both as markets around the world recover and over the long term," said Lundgren.
The number of top brands in the tent of the new Stanley Black & Decker is impressive: Stanley, FatMax, Bostitch and Mac Tools among Stanley brands; Kwikset, DeWalt Porter Cable, Price Pfister with Black & Decker. Black & Decker CEO Archibald said the new Stanley Black & Decker is a "one of a kind opportunity" that brings together two companies with a combined 250 years of history.
The companies point to $350 million in estimated annual cost synergies to be realized in about three years.
The near-term focus is to integrate both companies. The new entity will continue to operate out of both Towson, Md., headquarters of Black & Decker; and New Britain, Conn., headquarters of the Stanley Works.
Existing growth platforms include convergent security, mechanical security and industrial and automotive tools, while new growth platforms were described Tuesday morning as engineered fastening, health care and infrastructure.
For Stanley, the construction and DIY segment currently stands at 34% of revenue. That segment is estimated to increase to 49% of revenue when combined with Black & Decker, according to James Loree, executive VP and COO of the Stanley Works.
The transaction remains subject to regulatory approvals and approval of Stanley and Black & Decker shareholders, according to the press release announcing the deal.