The Stanley Works and The Black & Decker Corp. announced this week that they will merge to create Stanley Black & Decker, an $8.4 billion global tool company. The deal is worth $4.5 billion, the companies said in a joint press conference on Tuesday.
"Stanley Black & Decker together will have a comprehensive offering across all major tool categories and great resources to support continued expansion of our combined security and industrial businesses," said John Lundgren, chairmen and CEO of Stanley, who will be president and CEO of the combined company.
While the deal is described as a merger, Stanley will retain a slight edge in ownership. Stanley shareholders will own 50.5% of the company, with Black & Decker shareholders owning 49.5%. The new board of directors will consist of nine members of Stanley’s board, and six from Black & Decker.
The two corporations identified “cost synergies” as a driver behind the merger. This is not the first time that Stanley and Black & Decker have considered joining forces. “The decision to merge now has nothing to do with current economic conditions,” said Black & Decker president and CEO Nolan Archibald in Tuesday’s press conference. “Both companies were weathering the downturn extremely well, and both have very bright futures on a standalone basis. Historically, this relationship is a romance that started 28 years ago. On three different occasions, the CEOs met to discuss the unique and complementary fit of the two companies, and had talked about a merger, but it didn’t go anywhere for various reasons. Right now, we feel there is significant shareholder opportunities and that we ought to pursue the merger.”
In addition to an anticipated $350 million in cost synergies, the companies note that there is virtually no overlap between the brands’ product offerings. The merger will allow the combined company to have a presence in markets that would not have been possible for the individual brands.
Black & Decker comprises a collection of well-known building industry brands, including consumer Black & Decker power tools, DeWalt professional and industrial tools, Delta and Porter Cable woodworking tool brands, Baldwin and Kwikset lock and lockset companies, and Price Pfister faucet company.
Stanley is best known for its hand tools, including the Fatmax and Bostitch brands. The company also includes Stanley Security, Best Access Systems, and Facom security brands. Going forward, Lundgren identified security products as one of the growth segments for Stanley Black & Decker, along with engineered fastening.
“Integration will be a challenge, but both companies have a record of successful integration of new brands,” Lundgren said. “Both have tested and proven process and methodologies for integration. We’ve identified the A Team from Stanley who have year of integration experience around the globe, and we’re now in a position to work with Nolan and his executive team to get the best of both companies. We feel there’s a high probability of success of meeting or exceeding the goals before us.”
Both companies anticipate the deal will be completed by the first half of 2010. Stanley's Lundgren will be president and CEO of the new firm, Black & Decker chairman, president, and CEO Nolan Archibald will become executive chairman. Both Stanley and Black & Decker’s boards of directors have approved the merger, which must now be approved by shareholders and cleared by regulators.
“The complementary product and market fit of these two companies creates significant value for both companies' shareholders that neither company can accomplish on a stand-alone basis,” Archibald said. “Joining forces with Stanley brings together two world-class companies with rich histories and strong track records in a one-of-a-kind opportunity to create outstanding benefits for our respective shareholders, customers, and employees.” --Lauren Hunter, associate editor, REMODELING.
ProSales Information Service contributed to this report.
