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Stanley Works to buy Black & Decker

The $4.5-billion, all-stock deal would create the largest U.S. toolmaker, analyst says.

November 03, 2009|Associated Press

CHICAGO — The toolmaker Stanley Works is buying rival Black & Decker Corp. for $4.5 billion, uniting two of their industry's most iconic brands.

The deal would create the largest U.S. toolmaker, Morningstar analyst Anthony Dayrit said.

Under the all-stock deal announced Monday, Stanley shareholders will own about 50.5% of the combined company, which will be called Stanley Black & Decker. Black & Decker shareholders will hold 49.5%.

Stanley Works Chairman John F. Lundgren will be president and chief executive.

Black & Decker shareholders are to receive about 1.28 shares of Stanley Works for each share of Black & Decker they own. The nine members of Stanley Works' board will be joined by six members from Black & Decker's board.

The deal will cut costs by $350 million within three years, probably in part through job cuts, and increase earnings by $1 a share within three years, the companies said.

Executives said most of the savings would come from reducing corporate overhead and consolidating business units and manufacturing, distribution and purchasing.

Black & Decker, based in Towson, Md., has 22,100 workers. Stanley Works, based in New Britain, Conn., has 18,200 workers.

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 the DeWalt, Porter-Cable, Kwikset and Baldwin brands.

Dayrit said space remains for smaller toolmakers that make up most of the industry.

"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," he said.

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.

The deal was announced after the close of regular trading.

Shares of Black & Decker had risen 12 cents Monday to close at $47.34. In after-hours trading, shares rose as much as 23% to $57.88.

Stanley Works shares had fallen 8 cents to close at $45.15. After hours, shares rose as much as 4.3% to $47.13.

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