DOW JONES NEWSWIRES
Stanley Works (SWK) agreed to buy Black & Decker Corp. (BDK)
for $4.5 billion in stock, combining two household names in the
market for tools.
Both companies' boards have approved the deal, which will give
Black & Decker shareholders 1.275 shares of Stanley for each
share. Based on Monday's closing price, that values Black &
Decker at $57.57, a 22% premium.
Stanley shareholders will hold a small majority stake in the
combined company, at 50.5%.
Wall Street applauded the deal, sending both companies' shares
up in after-hours trading. Black & Decker shares were recently
up 20%, to $56.59, while Stanley shares rose 3%, to $46.52.
The companies expect the combination will result in savings of
$350 million a year and see the deal adding $1 a share to earnings
by the third year.
They also touted their complementary products and market fits.
Black & Decker's position in power tools, security hardware
products and engineered fasteners has no significant overlap with
Stanley's product and service offerings in hand tools and
mechanical and electronic security products.
John F. Lundgren, chairman and chief executive of Stanley, will
be president and CEO of the combined company. Black & Decker
leader Nolan D. Archibald will be executive chairman for three
years.
Archibald said "While we are pleased with the initial premium of
approximately 22%, 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."
-By Jay Miller, Dow Jones Newswires; 212-416-2355;
jay.miller@dowjones.com