Today it was announced that Stanley Works agreed to purchaseย Black & Decker Corp. for $3.5 billion in stock. While this may amaze some, talk of this merger have been occurring in some form or another for almost 30 years. In case you underestimate this merger, consider that Black & Decker is the parent company for DeWalt, Porter Cable & Delta power tools as well as Price Pfister faucets & Kwikset locks.When we sayย Stanley Buys Black and Decker we mean that youโre seeing one of the largest tool mergers in the industry.
Previously, merger attempts failed over various issues, like who was to take the reins as CEO. This time the two companies decided on Stanleyย CEO John Lundgren who worked for Georgia-Pacific prior to joining Stanley in 2004.
Nolan D. Archibald, Black & Deckerโs chairman and chief executive, met with John F. Lundgren, Stanleyโs chairman and chief executive over a special lunch. Both CEOs were apparently โtotally swayedโ by theย potential costs savings, which they estimate could be in excess ofย $350 million (though no specifics on a timeframe for those savings were given).
Official Statement
The combination of The Stanley Works and Black & Decker willย unite two highly complementary companies with iconic brands and strongย growth prospects to create a stronger, globally diversified industrialย enterprise.
This compelling strategic combinationย is expected to create tremendous value for shareholders of bothย companies through the realization of significant cost synergies andย enhanced growth opportunities. Additionally, because Stanley Buys Black and Decker, customers will benefitย from a more comprehensive product and service offering, a world-classย innovation process and our continuing commitment to operationalย excellence. And, employees of both companies will benefit from enhancedย opportunities as part of a more global and diversified company.
Stanleyย Black & Decker will be a leading global company in hand and powerย tools & storage, and have a strong presence in mechanical andย electronic security and engineered fasteners with such well-knownย brands as Stanley, Black & Decker, FatMax, DeWalt, Bostitch,ย Porter-Cable, Facom, Emhart Teknologies, Proto, Kwikset, Mac Tools andย more.
Effects on Wall Street
Apparently Wall Street appreciated the move as Black & Decker stock climbed almost 24 percent and Stanley rose 5.1 percent. Think this is the final culmination? Nope. The company will continue to grow through acquisitions by using the saved money created by the initial acquisition. That could equate to $350 million more in takeovers.
The execs say that fewer than 4,000 jobs, or less than 10 percent of totalย positions at the combined company, will be cut.ย Most of the reductions will be in corporate offices, as well asย through purchasing, regional and business unit consolidationsย and factory efficiencies.
Stanley shareholders will own about 50.5 percent of theย equity of the combined company and Black & Decker shareholdersย will own about 49.5 percent, according to the statement.
If all goes as expected, the transaction will probably close in the first half of 2010.
