Stanley: Black & Decker Deal To Cut Pro Forma GAAP EPS By $3-$3.25 In 1st Year
November 03 2009 - 10:19AM
Dow Jones News
Stanley Works (SWK) expects its combination with Black &
Decker Corp. (BDK) will cut pro forma earnings per share by $3 to
$3.25 in the first year after the deal closes, based on generally
accepted accounting principles.
During a conference call to discuss the $4.5 billion deal,
Stanley's Chief Financial Officer Donald Allan Jr. said the
combined companies will see 25 to 35 cents a share in earnings
accretion during the second year and will result in pro forma GAAP
earnings boosted by 95 cents to $1.05 a share by the third year
after closing.
Stanley Chairman and Chief Executive John Lundgren said with
"minimum overlap" between the two companies, the deal should close
in the first half of 2010.
Pro forma 2009 revenue would be $8.4 billion, but assuming $350
million in cost savings from the combination within three years of
the deal's closing and improved margins across the portfolio, the
new company should generated about $1 billion in free cash flow and
more than $1.5 billion in earnings before interest, taxes,
depreciation and amortization by 2012, executives said.
The earnings dilution in the first year is tied to $400 million
in one-time costs associated with integrating the two companies,
mostly tied to headcount reductions.
Stanley Works late Monday announced it will buy Black &
Decker for $4.5 billion in stock in a deal aimed at allowing both
companies to cut costs and reinvest back into growth platforms,
such as security solutions and engineered fasteners.
The deal 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%.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com
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