Stanley buys Black & Decker for $4.5 billion in sound strategic merger
Filed under: Company News, Investing
Investors are applauding a deal announced Monday afternoon between two makers of tools. Stanley Works (SWK) will acquire Black & Decker (BDK) in an all stock deal according to DealBook. While the agreement called for Black & Decker to be acquired for $4.5 billion in Stanley stock at the time the market closed Monday, the price of the deal is rising because Wall Street loves it so much.
How so? The deal is a stock swap which means that Stanley will exchange 1.275 shares of its stock for each share of Black & Decker. That was a 22 percent premium over Friday's market close. Since the deal was announced, however, the stock of Black & Decker surged over 20 percent, to $57.10. And in a really unusual happening, even Stanley's shares rose 4 percent, to $47. That gain means that Black & Decker shares are worth even more, according to DealBook.
Behind investor's enthusiasm is the possibility of significant cost savings enjoyed by the combined company. The two companies expect the merger to save $350 million a year, mainly because their operations complement each other -- Stanley sells hand tools and construction equipment, while Black & Decker makes power tools.
It looks to me like this is an old-fashioned strategic merger that will make the combined companies stronger. Now all they need is an economic recovery to spur a boost in demand for their combined product line.
Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.
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Reader Comments (Page 1 of 2)
11-02-2009 @ 10:36PM
jdub said...
china should be happy since thats the only place that Stanley and Black and Decker have their tools made
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11-03-2009 @ 3:19PM
Michelle said...
That's why Stanley's HQ is based in New Britain, CT??
11-03-2009 @ 3:38PM
Oscaro said...
Michelle said: "That's why Stanley's HQ is based in New Britain, CT??"-_-_- They create paperwork in New Britain. The manufacturing process takes place (i.e. jobs) in China. Take a walk through the power tools in any hardware store, and you will NOT find any that are manufactured in the US, including premium brands like Milwaukee and Dewalt. That's why tax breaks for corporations don't work as they are intended. They profit from sales and they profit from our tax dollars by taking the incentives from the American govt and creating jobs in other countries. Many would like to blame the unions, but the fact of the matter is that these companies would have done it whether they were paying union wages or minimum wage. Sooner or later, it will wind to a stop, when there is no longer any consumer market in the US, having reduced everyone to poverty level, but the big companies still won't care having focused their marketing efforts in currently developing nations. We need to stop cheering them on, because corporations are like termites, feeding on the structure while they destroy it from within.
11-03-2009 @ 12:36AM
stever said...
Great, this should allow them to combine operations and cut costs by eliminating half the white collar work force that still exists in the U.S. I bet this will enable them to cut some Chinese manufacturing jobs, also. Let's all applaud!
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11-03-2009 @ 2:43PM
Toni G said...
As sad as that statement is, I have to Thank You for the Chuckle.
11-03-2009 @ 7:28AM
dang1067 said...
Stanley is owned by "Yan Can Cook" of China!!! Will never buy Black & Decker ever again!!! I'll stick with "CRAFTSMAN!!!"
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11-03-2009 @ 2:46PM
James said...
Really? Stanley is owned by chinese zipperheads? Son of a bitch.
11-03-2009 @ 3:47PM
Oscaro said...
I hate to break it to you, but Craftman products are made offshore as well. The only good thing about Craftsman tools is the ease with which you can get the hand tools replaced under the warranty, but their power tools are exactly like Skil and B&D.
11-03-2009 @ 5:52PM
Jimmy said...
Check your facts, or.. read.
Craftsman is NOT 100% made in the USA.
NONE of their bench tools are US, Their Tape measures are no longer LiftTime. you know why? thats right! Not made in the US and they break too often to replace all the time.
I know, I used to work for Sears in the tool department.
11-03-2009 @ 9:02AM
stel1ldy said...
I work for Stanley here in the USA.making Hand tools.....I hope this turns out to be a great move for both companies.
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11-03-2009 @ 9:16AM
monte said...
if you work for stanley look out I worked for an emhart company kwikset locks for 21 years that was taken over in the mid nineties by B&D. things were fine a couple years then parts of the plant went to mexico piece by piece.
needless to say now most of its facility is now based in china. as far as you people that support sears craftsman look on the tool your buying even alot of that is made in china now. america was sold out!!!!
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11-03-2009 @ 2:57PM
James said...
Look here people, I would gladly pay extra for something made in America, so what do we still make? My wife and I wanted to boycott chinese made stuff but couldn't find anything made here! As far as I am concerned, I'd gladly pay extra for Snap-on quality over Harbor Freight quality any day. I just can't find it. At the bottom of this swirling American drain you will find the unions. Unions are already gearing up to take Ford down now that they turned a big profit last quarter. Are people really THAT stupid? Let's all kill the golden goose some more, it gives Obama a hardon.
11-03-2009 @ 9:42AM
john said...
Stanley tools went to sh@# when they moved operations to china. Black and decker was allways crap!!!!!!!!!!!!!!!!!!!!
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11-03-2009 @ 9:45AM
john said...
more of the same how about that change obama's way. corporate greedy pigs sell out on a daily basis for slave labor
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11-03-2009 @ 9:38PM
Bill said...
When you think Black and Decker don't just think low priced tools from discount stores; think Dewalt, Porter Cable, Delta Machinery, Kwikset, and Price Pfister. They own all of them.
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11-03-2009 @ 11:22AM
KP said...
Probably a great strategic move for both companies for the long-haul. Right now, as this article suggests, both manufacture products directed mainly at the consumer/DIY market which is undergoing a major doldrum, let alone the construction industry. Unfortunately for those connected with the two will witness some major lay-offs. It always happens after a merger.
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11-03-2009 @ 11:38AM
Steve Brown said...
These companies DO NOT care about the people that purchase their tools. They don't care about building the tools here so people have a job so they can PURCHASE their CHINA Garbage!
Look at where the tools are made. CHINA! As I recall, China is a Communist country. We embargo Cuba because they are.......Communist!
Even Craftsman is being forced to have their tools made in China to be able to compete.
I say if you have to pay top dollar for CHINA junk, buy it at Harbor Freight! You cut out the middleman.
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11-03-2009 @ 2:51PM
James said...
Oh man, Harbor Freight is an example of what you can expect from china in the long run. Their crap breaks before you can get it out of the box at home.
11-03-2009 @ 2:46PM
Toni G said...
NO ONE is forcing anyone to do anything. GREED factors in on the part of the shareholders, but WE want to pay CHINA PRICES and keep the jobs in Merka. How do you recommend that be done?
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11-03-2009 @ 2:49PM
Toni G said...
BTW, "The Middleman" is probably the ONLY one still IN America.
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