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Power tool maker Black & Decker of Towson, having struggled during the recession, has agreed to an acquisition by The Stanley Works of New Britain, Conn., a global tool supplier, in an all-stock transaction valued at about $4.5 billion, the two companies announced Monday.
The Stanley Works, founded in 1843, supplies tools and engineering services for the industrial, construction and do-it-yourself sectors. Black & Decker, established in 1910, has specialized in manufacturing and selling power tools and other products under an array of brands including Black & Decker, Dealt, Porter-Cable and Kwikset.
John F. Lundgren, chairman and CEO of Stanley, will be president and CEO of the combined company. Nolan D. Archibald, chairman, president and CEO of Black & Decker, who has been CEO for 24 years, will be executive chairman of the combined company for three years, according to the joint statement by the companies.
"While we are pleased with the initial premium of approximately 22 percent, the driving motivation of the transaction is the present value of the $350 million in annual cost synergies and the combined financial strength and product offerings of the merged companies," Archibald said in the statement. "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. 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 ou respective shareholders, customers and employees."
Black and Decker of Towson reported recently its third-quarter profit fell to $55.4 million from $85.8 million in the prior-year quarter. Sales fell to $1.21 billion from $1.58 billion.
"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," Lundgren said in the statement. "Stanley and Black & Decker together will have a comprehensive offering across all major tool categories and greater resources to support continued expansion of our combined security and industrial businesses."
The power tool division is to stay in Towson, while corporate headquarters will be in Connecticut.
The companies said they have entered into a "definitive merger agreement to create Stanley Black & Decker," which would be an $8.4 billion company. Under the terms of the transaction, which both boards have approved, Black & Decker shareholders will receive a fixed ratio of 1.275 shares of Stanley common stock for each share of Black & Decker common stock they own, representing an implied premium of 22.1 percent to Black & Decker's share price as of Friday.