Stanley Works Reiterates Views On Black & Decker Deal Benefits
January 27 2010 - 10:42AM
Dow Jones News
Stanley Works Inc. (SWK) expressed confidence that it can
achieve its previously stated financial targets for its $4.5
billion acquisition of Black & Decker Corp. (BDK). In slides
accompanying a conference call scheduled for 10 a.m. EST, Stanley
also said it expects the deal to close by the end of the first
quarter or the beginning of the second quarter.
Stanley expects the business combination to boost per-share
earnings by about $1 by the third year after the deal closes, based
on $350 million in annual cost savings and opportunity to improve
margins, according to the slides. It also expects about $1 billion
in free cash flow and more than $1.5 billion in earnings before
interest, taxes, depreciation and amortization by year three.
Both companies must obtain shareholder approval and regulatory
approval from the European Union and other foreign
jurisdictions.
Under terms of the deal announced Nov. 2, Black & Decker
shareholders will receive 1.275 shares of Stanley for each share.
Based on Tuesday's closing price, that values Black & Decker at
$67.97, a 27% premium. Stanley shareholders will hold a 50.5%
majority stake in the combined company.
Shares of Stanley recently traded down 1.9% at $52.32, while
Black & Decker shares fell 1.8% to $66.03.
Earlier Wednesday, Stanley said it swung to a fourth-quarter
profit as improved profitability helped offset continued weak
demand. The company reported a profit of 68 cents a share, compared
with a year-earlier loss of 1 cent a share. Earnings in the latest
quarter included a 22-cent charge related to the Black & Decker
deal.
Sales dropped 11% to $969.4 million.
Analysts polled by Thomson Reuters forecast earnings of 73 cents
a share on sales of $974 million, but it was unclear whether that
forecast included the deal-related charges.
-By Mary Ellen Lloyd, Dow Jones Newswires; 704-948-9145;
maryellen.lloyd@dowjones.com
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