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Stanley Works tool maker to buy Black & Decker
2009-11-02
CHICAGO - The tool maker Stanley Works is buying rival Black & Decker Corp. for $4.5 billion, the two companies said Monday, uniting two of their industry's most iconic brands. The deal would create the largest U.S. toolmaker, Morningstar analyst Anthony Dayrit said. Stanley shareholders will own about 50.5 percent of the combined company, which will be called Stanley Black & Decker. Black & Decker shareholders will hold a 49.5 percent stake after the all-stock deal is complete. "This is a unique opportunity to bring together two great companies, each with first-rate brands, and provide enhanced opportunities to generate superior returns as we build on this new, larger platform," Stanley Chairman John F. Lundgren, who will be president and CEO, said in a statement. Black & Decker shareholders are to receive about 1.28 shares of Stanley Works for each share they own. The nine members of Stanley Works' board will remain in place and be joined by six new members from Black & Decker's current board. The deal will cut costs by $350 million within three years, likely in part through job cuts, and grow earnings per share by $1 within three years, the companies said. Executives said most of the savings will come from reducing corporate overhead and consolidating business units and manufacturing, distribution and purchasing. James C. Lucas, managing director of Janney Montgomery Scott LLC, said there is little overlap in the two companies' products - with Stanley being a leader in consumer and industrial hand tools and security, and Black & Decker in power tools. Lucas said it was too soon to speculate about how the deal will affect jobs, but the two companies have different processes and therefore different plants. Black & Decker, based in Towson, Md., has 22,100 workers. Stanley Works, based in New Britain, Conn., has 18,200 workers. The combined company's corporate headquarters will remain in Connecticut while its power tool division will remain headquartered in Maryland. Stanley Works' brands include its Stanley tools line and FatMax, Bostitch and Mac Tools, which are used on cars. In addition to its namesake line, Black & Decker owns DeWalt, Porter-Cable, Kwikset and Baldwin brands, which are popular with both consumers and professionals. Dayrit said space remains for smaller tool makers that make up most of the industry. "There's a lot of smaller players who make cheaper tools," he said. "I think these guys will still be competitive because you have consumers that won't be willing to pay up for the quality of a Black & Decker tool." Each company's board of directors has signed off on the deal, but it still must win regulatory and shareholder approval. It's expected to close in the first half of 2010. Black & Decker shares climbed $10.12, or 21.4 percent, $57.45 in after-hours trading after closing at $47.34 earlier in the day. Stanley Works shares rose $1.77, or 3.9 percent, to $46.96 in after-hours trading. Shares of the company closed at $45.15 in regular trading. ___ Associated Press Writer Kasey Jones contributed reporting from Baltimore, Md.
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