The fate of licensees in a merging world

The Stanley/Black & Decker merger is still working itself through the process and is not expected to be finalized until mid-2010. And while the two companies only seem to gain from such a merger, the fate of many other companies that hold licensing agreements with them hangs in the balance.

The ultimate question for them is: Will the new merger spell the end for some of the two companies’ major licensing agreements? It will not likely happen soon, according to retail analyst Carol Spieckerman of New Market Builders.

“In my experience, consolidation of licensees isn’t the first step that merged companies take; however, it’s not often overlooked for the long term,” she said.

This seems in harmony with the message the two companies are putting out. In their Nov. 2, 2009, press release announcing the merger, the companies stated one of the strategic benefits to the merger as “Complementary Global Product And Service Offerings. Black & Decker’s position in power tools, security hardware products and engineered fasteners fits seamlessly with Stanley’s product and service offerings in hand tools and mechanical and electronic security solutions, with no significant overlap in product lines.”

And while the two companies’ product lines may be largely complementary, Spieckerman thinks that over time, the newly formed company may look to consolidate its licensee base.

“This is particularly true at a time when retailers are rationalizing SKUs, suppliers and brands; Stanley Black & Decker will want to ensure that the licensees they do empower are in good standing with their retail partners,” she said.

One licensee that’s not sweating the merger is Boca Raton, Fla.-based Baccus Global, which holds a license to produce work lights for Stanley. One of its best-known products is the SquidBrite work light.

“I think we are well-positioned with Stanley,” said company president Matt Inskeep. According to him, the key to a successful licensing agreement is maintaining value in each other. For Baccus, they gain a lot from being able to use the Stanley name.

“Stanley is a great brand and has a lot of history and trust behind it,” he said. “We help drive their brand awareness as well.”

Inskeep said that he had a chance to speak with the folks at Stanley shortly after the merger was announced, and he received assurances that the company still planned to maintain its current agreement now and in the future.

“I think they’ve handled that well. They’ve had open dialogue with us the whole way through this,” he said. “As a company, we feel very confident with our relationship with Stanley.”

And while neither company has put out an official statement regarding the future of their licensing agreements, one source at Black & Decker, who wished to remain anonymous, told HCN that the subject of licenses has not yet been broached during the negotiations, and will most likely not be addressed in the near future.