The Stanley Works reached an $8.5 billion merger agreement with power-tool maker Black & Decker Corp., with the new Stanley Black & Decker to be based at Stanley”™s New Britain headquarters.
Stanley is paying a 22 percent premium for the shares of Towson, Md.-based Black & Decker, with Stanley investors holding just more than half the stock of the combined company.
Stanley CEO John Lundgren will be CEO of the combined company, while Black & Decker CEO Nolan Archibald will be executive chairman for three years.
The companies said they expect the combination to result in annual savings of $350 million, without immediately specifying job cuts or transfers that could result from the merger. Stanley had more than 18,000 employees while Black & Decker”™s work force numbered 22,000.
“We have taken over $200 million of costs out just over the last couple of years,” Archibald said, speaking of Black & Decker in a conference call with analysts. “In fact, we have taken so much out that any further reductions on our own would likely get into the bone and would impair our ability at the recovery to really take full advantage of it if we were to cut any deeper. That is why this thing was so attractive to both companies, because we have both cut our costs substantially almost to the bone, and this gives us an opportunity now to eliminate those duplicate expenses.”
In the third quarter, Stanley had a $60 million profit as sales declined 16 percent from a year earlier to $936 million, while Black & Decker earned $55 million on $1.2 billion in sales.
