Diversified manufacturers The Stanley Works (NYSE:SWK), New Britain, CT, and The Black & Decker Corp. (NYSE:BDK), Towson, MD, have announced plans to merge.
Read “Stanley, Black & Decker Merger Impact on Distribution Channels” for more in-depth analysis.
The tool manufacturers will form an $8.4 billion company named Stanley Black & Decker. In the deal, Stanley will pay about $4.5 billion to Black & Decker shareholders, who will receive 1.275 shares of Stanley for each share of Black & Decker share they own, a premium of 22% over Black & Decker’s Monday price.
The boards of directors of both companies have already approved the merger. Upon closing, Stanley shareholders will own 50.5% of the equity in the combined company.
John F. Lundgren, CEO of Stanley, will be president and CEO of the combined company. Nolan D. Archibald, president and CEO of Black & Decker, will be Executive Chairman of the combined company for three years.
Benefits of the merger, as outlined by the companies today:
- Complementary global product and service offerings. Black & Decker’s position in power tools, security hardware products and engineered fasteners complements Stanley’s position in hand tools and mechanical and electronic security solutions. The companies say there is "no significant overlap in product lines."
- The company will be "more diversified," with greater scale in hand and power tools, and storage, mechanical and electronic security, as well as a continued presence in engineered fasteners and plumbing products. Geographic footprint will also be broader.
- The companies expect $350 million in estimated annual cost synergies within three years thanks to reductions in corporate overhead, business unit and regional consolidation, manufacturing and distribution, and purchasing.
James M. Loree, Executive Vice President and COO of Stanley, who will be EVP & COO of the combined company, said: “This transaction is a significant step in advancing each priority in the strategic framework Stanley has embraced since 2004. It builds strength in all of our business platforms, furthering our goal to maintain portfolio transition momentum, and greatly enhances our resources to continue to invest in high-growth areas. We have a proven track record of successfully integrating organizations, and a critical framework for sustained operational excellence in the Stanley Fulfillment System. Planning for the integration of these two companies is well underway and we expect to expeditiously realize the full value of cost synergies we have identified as a result of this landmark transaction.”
The combined company will retain a presence in both Connecticut and Maryland, with its corporate headquarters in New Britain and the Power Tools headquarters remaining in Towson.
The transaction is subject to customary regulatory approvals and closing conditions and requires the approval of Stanley and Black & Decker shareholders.
Stanley brands include Stanley, FatMax, Bostitch, Facom, Proto
, Mac Tools
, Sonitrol, Stanley Security Solutions, Best, and Vidmar.
Black & Decker brands include Black & Decker, DeWalt, Porter-Cable, Emhart Teknologies, Kwikset, Baldwin and Price Pfister.