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Tool time for Stanley, Black & Decker
The leading makers of hand and power tools announce a $4.5 billion merger. But could Black & Decker have gotten a higher price?
As anyone who does a lot of home repairs or builds decks knows, you need the right tools to get the job done.
Stanley Works (SWK) and Black & Decker (BDK) agree and believe they can get you the right tools better as one company than as two.
After today's close, the companies announced a $4.5 billion all-stock merger with Stanley the surviving company. Shares of both companies surged after hours.
Under the terms of the deal, Black & Decker shareholders will receive 1.275 shares of of Stanley stock for each of their shares, a 22.1% premium over Black & Deck's close on Friday.
Wall Street loves the deal, in part because the companies expect it to save them $350 million a year in costs. The companies had combined sales of $10.5 billion in 2008 but saw profits cut substantially by the recession.
They claim the result of the deal will be a company with $8.4 billion in revenue.
The deal "makes strong sense as the housing market resumes 'new normal' growth and raw-materials prices rebound," analyst Brian Sozzi of Wall Street Strategies wrote investors today.
Black & Decker shares were up nearly 22% after hours to $57.70 from a regular close of $47.34. The regular close was up just 12 cents from Friday, although options trading was active last week.
Stanley was up 4.1% to $47 from a regular close of $45.15.
The companies are venerable. Stanley, based in New Britain, Conn., was founded in 1843. Black & Decker, headquartered in Towson, Md., went into business in 1910.
They run complementary businesses with highly iconic brands.
Stanley makes hammers, screwdrivers, tape measures and owns the Bostich line of pneumatic tools -- nailers, compressors and the like.
Black & Decker sells its own brand of tools as well as the higher-end DeWalt line of power tools and the Delta/Porter Cable line of big power tools like table saws. The company invented the power drill.
The companies also share Home Depot (HD) and Lowe's (LOW) as their largest customers.
The companies employ a total of 40,000 workers. It was not clear how many would lose jobs from the deal. The company, to be called Stanley Black & Decker, will be headquartered in New Britain with its power tools business headquartered in Towson.
Stanley and Black & Decker had seen their shares hammered by the housing bust and the stock market crash.
Black & Decker peaked at $96.33 on July 12, 2007; Stanley's peak came a week later at $63.92.
With today's close, Black & Decker shares are still 51% below their 2007 peak. Analyst David MacGregor with Longbow Research in Independence, Ohio, told The Baltimore Sun that he thought Black & Decker would get a higher price.
Stanley shares, meanwhile, are off 29.4% from their 2007 high.
The deal is expected to close in the first half of 2010, and Stanley shareholders would own about 50.5% of the the combined company; Black & Decker shareholders would own about 49.5%.
Once the deal is closed, Stanley CEO John Lundgren would become president and chief executive of the combined company. Black & Decker CEO Nolan Archibald would become the executive chairman for three years.
The nine members of Stanley’s board would be joined by six members from Black & Decker’s board, the companies said.
The "new" world economy is other countries standard of living going up and the U.S. standard of living declining. Kind of an even playing field around the globe. The American dream is becoming just that for the 20 and 30 somethings out there, a DREAM. The root of this is big business sending good paying jobs oversees so "shareholders" get rich. Basically if you are not a wall street trader, a CEO of some big company, or weren't born into wealth expect your standard of living to continue to decline until something is done about this root problem.
Pulling my own wagon-not riding someone elses and ToyHauler 12
It's a mater of simple supply and demand. Us (the consumer) buy where we get the best 'value' - of which is cost + quality typically speaking. We all make choices every day, so if you buy Chinese-manufactured products, then you support that process. As Xison mentions, there often are alternatives. For the people that own the stock in a company (i.e., shareholders), they want the same for the investment - more value. If companies don't go low cost then they loose value for the owners.
If people don't like China purchases, stop buying China-made. The other option is become the shareholder and stop making in China and accept little to no margin for your investment.
Craftsman tools have not been made by an American company in years. Look at the model numbers. Anything starting with; 315, made by Ryobi (um, definately not American),
113, made by Emerson Electric (made from Chinese parts, assembled in the US),
900, made by Black & Decker in China,
135, made by Skil, in China.
Some people just have no clue. Sears (a.k.a. Craftsman, Kenmore) does not make anything, they rely on manufacturers to supply the with items that meet marketing specs. Manufacturers meet the spec by supplying them a finished product as cheaply as possible, which means sourcing parts from the cheapest point, which means China. Is this bad business, I think not. It's called smart business!
God doesn't need to help our country we need to.
I wouldn't hold your breath there. You are beginning to turn blue! God is not going to pay your bills, feed you, or save the economy. Name one intangible product that ever came to your rescue.
For example on how nutty people are to believe in a bogus God, I needed an apartment in LA and finally found one in about two weeks. AFter a lot of driving, looking,, then finally finding one, then the church I attended said I should "thank god" for finding the apartment. Why? I was the one that got off my azz and did all the ground work in finding a place to live. Not some intangible God that people believe in lifted a finger.
Get real people! God is not coming to your rescue. Didn't you notice that when the stocks tumbled, people were losing their homes, cars, living in their cars, gas prices were at an all time high... did any of the churches open their doors for the? HeII NO! They are in it for the money just like any other business on the planet. Easy money having people give it to you for a few hours of god babbling nonsense. People, save your dollars, because when times get tough, these so-called godly people and churches will close the doors right in your face. God, Church and Religion is a business and nothing more. You have been misled and conned out of your monies just like those fools buying fake gold chains off the streets of DTLA area thinking they are getting real gold for a cheap price.
StockScouter data provided by Gradient Analytics, Inc.
Quotes supplied by Interactive Data.
MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.
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