Stanley Black & Decker, Inc.'s
) earlier communication of its decision to sell off its Hardware
& Home Improvement Group (HHI), the industrial tool maker
announced successful completion of the divestment deal with
Spectrum Brand Holdings, Inc.
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The transaction has been valued at $1.4 billion in cash or $1.3
billion of after-tax proceeds for Stanley Black & Decker. The
company intends to use half of the sale proceeds for share
repurchases, a portion for debt reduction and the remaining
amount for reinvestment in suitable acquisitions.
The company found the long-term opportunities from HHI rather
inconsistent with the objectives of the whole company and hence
it decided that the sell-off would unlock resources blocked in
this line of business. Free resources later will be utilized for
creating long-term growth opportunities for the company.
HHI divestment will trigger a modest dilution in the range of
10-20 cents in earnings per share in 2013. This includes the
impact of Stanley's HHI divestment, share repurchases and
Infastech acquisition. As far as 2012 is concerned, results will
be adjusted to exclude HHI while free cash flow guidance was
reiterated at $1.2 billion, exclusive of merger and acquisition
Hardware & Home Improvement Group was acquired as part of the
Black & Decker acquisition, completed in March, 2010. The
business specializes in manufacturing residential locksets,
residential builder's hardware and plumbing fixtures. Major
brands include Kwikset, Weiser, Baldwin, Stanley, National and
Pfister brands, among others.
Acquisitions and divestments have been the company's primary
tools for progressing on a growth strategy of shifting its
business portfolio toward its favored growth markets. Besides the
strategic decision of selling off HHI, the company, in July 2012,
agreed to acquire Hong Kong based leading manufacturer and
supplier of specialty engineered fastening technologies,
Infastech for $850 million in cash from CVC Capital Partners and
Standard Chartered Private Equity Limited.
Stanley Black & Decker manufactures tools and engineered
security solutions across the globe. Prime competitors of the
). The stock currently bears a Zacks #4 (Sell) Rank.