By V. Dion Haynes
Washington Post Staff Writer
Tuesday, November 3, 2009
Black & Decker, struggling amid a sales slump resulting from a dramatic slowdown in construction, said Monday it would merge with rival Stanley Works in a $4.5 billion deal joining two of America's best-known tool manufacturers.
The proposed merger would put under one corporate umbrella a number of familiar consumer brands: DeWalt, Kwikset and Price Pfister from 99-year-old Black & Decker, and Mac Tools, Stanley Security Solutions and FatMax from 166-year-old Stanley Works. The deal is the largest in the consumer products sector this year, according to Dealogic, a data research firm.
The all-stock transaction has already been approved by both companies' boards and will be submitted to shareholders for a vote next month. In a joint statement, the companies said that there was little overlap between their business lines and that the deal could generate as much as $350 million a year in cost savings, mainly in the back office.
"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," Nolan D. Archibald, chief executive of Towson-based Black & Decker, said in the statement.
Stanley Works chief executive John F. Lundgren will become president and chief executive of the combined company. Archibald, who has served as chief executive of Black & Decker for 24 years, will stay on as executive chairman for three years after the merger's completion.
Under the terms of the deal, the company would retain a presence in Maryland but its headquarters would be located in New Britain, Conn., the current home of Stanley Works. About 1,250 workers in Black & Decker's power tools division would remain in Baltimore County.
The deal, however, is expected to result in the elimination of nearly 3,800 jobs across the combined company, including some in Maryland.
"I can't give a number, but most of the 250 [jobs in the Black & Decker corporate office in Towson] will be eliminated," said Roger A. Young, a Black & Decker spokesman. But "we expect less than 10 percent of the positions in the combined workforce [a total of 20,000 for Black & Decker and 18,000 for Stanley] will be eliminated."
Both companies have been reeling from the recession, which significantly curtailed construction. In the third quarter, Black & Decker's sales declined 23 percent from the same period a year ago, and the company said it was forced to lay off 5,000 employees. Stanley's third-quarter sales fell 16 percent, and officials said it cut about 2,000 jobs in December and the first part of 2009.
Black & Decker was hit harder because it is "tied more to residential construction," said Anthony Dayrit, an equity analyst with Chicago-based Morningstar who follows the companies. Stanley was aided by its security firm, which "performed well during the downturn."
Officials at Black & Decker and Stanley Works say the merger was not sparked by the recession but by a desire to combine two similar companies. "We serve many of the same customers, but we serve them very different products," said Tim Perra, spokesman for Stanley Works. "When we look at it, it's a match made in heaven."
Black & Decker is best-known for its lineup of power tools, while Stanley is known for hand tools. The deal calls for combining Black & Decker's KwikSet business with Stanley Works's security business.
Black & Decker, which closed at $47.34 on the New York Stock Exchange, climbed 23.7 percent, to $58.55, in after-hours trading. Stanley, which closed at $45.15, rose 5 percent, to $47.40.