The Stanley Works and Black & Decker Combine to Create an $8.4 Billion Global Diversified Industrial Leader – UnderhoodService

The Stanley Works and Black & Decker Combine to Create an $8.4 Billion Global Diversified Industrial Leader

Combining Stanley and Black & Decker creates a stronger, globally diversified company with a broad array of products and services, say the two companies. The combination will enhance both companies' core strengths and provide increased resources to invest in growth opportunities.

The Stanley Works and The Black & Decker Corp. have entered into a definitive merger agreement to create Stanley Black & Decker, an $8.4 billion global industrial leader in an all-stock transaction valued at approximately $4.5 billion.

The combination brings together two highly complementary companies with iconic brands and strong growth prospects. Founded in 1843, Stanley is a diversified industrial company with a global leadership position in hand tools and strong construction and do-it-yourself (CDIY), security and industrial businesses with well-known brand names such as Stanley, FatMax, Bostitch, Facom, Proto, Mac Tools, Sonitrol, Stanley Security Solutions, Best and Vidmar. With roots dating back to 1910, Black & Decker brings a global leadership position in power tools and a diverse product offering under an array of renowned brands including Black & Decker, DeWalt, Porter-Cable, Emhart Teknologies, Kwikset, Baldwin and Price Pfister.

Under the terms of the transaction, which has been approved by the boards of directors of both companies, 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, Oct. 30. Upon closing, which is expected in the first half of 2010, Stanley shareholders will own approximately 50.5 percent of the equity of the combined company and Black & Decker shareholders will own approximately 49.5 percent. The nine members of the current Stanley Board of Directors will be joined by six new members from Black & Decker’s Board of Directors.

John Lundgren, chairman and chief executive officer of Stanley, will be president and chief executive officer of the combined company. Nolan Archibald, chairman, president and chief executive officer of Black & Decker, who has been CEO for 24 years, will be executive chairman of the combined company for three years.

Lundgren said, “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. 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 transaction is expected to create tremendous value for shareholders of both companies through the realization of significant cost synergies, operating margin expansion and enhanced growth opportunities. Joining these two companies together creates a powerful engine for growth, both as markets around the world recover and over the long-term.”

Archibald commented, “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. 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 our respective shareholders, customers and employees. We are excited by the opportunity to combine Black & Decker’s unmatched lineup of power tools and security hardware with Stanley’s leading franchise of hand tools and security products and services in a transaction that is both strategically compelling and financially attractive to the stakeholders of both companies. In addition to the new company’s iconic brands, we each share a common heritage and passion for developing innovative products that meet the evolving needs of our end users, along with a commitment to operational excellence that will make us a supplier of choice across these categories.”

Combining Stanley and Black & Decker creates a stronger, globally diversified company with a broad array of products and services, say the two companies. The combination will enhance both companies’ core strengths and provide increased resources to invest in growth opportunities.

James Loree, executive vice president (EVP) and chief operating officer (COO) of Stanley, who will be EVP and COO of the combined company, commented, “This transaction is a significant step in advancing each priority in the strategic framework Stanley has embraced since 2004. It builds strength in all of our business platforms, furthering our goal to maintain portfolio transition momentum, and greatly enhances our resources to continue to invest in high-growth areas. We have a proven track record of successfully integrating organizations, and a critical framework for sustained operational excellence in the Stanley Fulfillment System. Planning for the integration of these two companies is well underway and we expect to expeditiously realize the full value of cost synergies we have identified as a result of this landmark transaction.”

In addition to Lundgren, Archibald and Loree, Stanley Vice President and Chief Financial Officer Donald Allan Jr. will be part of the executive team as senior vice president and chief financial officer of the combined company, and key members of both the Stanley and Black & Decker executive teams will hold positions in the combined organization.

An Integration Steering Committee has been identified to oversee bringing together the two companies after closing and will be co-chaired by Archibald and Lundgren.

The combined company will retain a presence in both Connecticut and Maryland, with its corporate headquarters in New Britain, Conn., and the Power Tools headquarters remaining in Towson.

The transaction is subject to customary regulatory approvals and closing conditions and requires the approval of Stanley and Black & Decker shareholders.

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