As communicated earlier with regard to finding a suitable option
for its Hardware & Home Improvement Group (HHI), industrial
Stanley Black & Decker, Inc.
) recently confirmed to have reached a divestment deal with
Spectrum Brand Holdings, Inc.
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At its second quarter 2012 conference call, the company expressed
its view that long-term opportunities from HHI were rather
inconsistent with the objectives of the whole company. A possible
divestment would free resources that can be later utilized for
creating long-term growth opportunities.
The transaction with Spectrum will generate $1.4 billion or roughly
$1.3 billion after-tax cash proceeds for Stanley Black &
Decker. Completion of the deal is subject to closing conditions and
regulatory approvals and is expected by the first quarter of 2013.
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.
HHI divestment is not likely to significantly dilute earnings for
2012. The company affirmed no changes in its earlier issued
non-GAAP earnings per share guidance range of $5.40-$5.65 and GAAP
guidance of $3.98-$4.34 for 2012.
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. HHI was then integrated in the former
Stanley's Security division, excluding its Pfisher business which
was combined with Stanley's CDIY segment.
Acquisitions and divestments have been the company's primary tools
for progressing on a growth strategy of shifting its business
portfolio toward favored growth markets. Besides the strategic
decision of HHI selling, 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.
The acquisition is likely to enhance Stanley's revenue generation
capacity, especially in the Asia-Pacific region. Earnings accretion
is expected immediately with roughly $0.15 in the first year of
acquisition and $0.35 in the third year. Annual cost saving of $25
million is expected by the third year while the first two years of
acquisition will see $25-$30 million of acquisition related
Stanley Black & Decker manufactures tools and engineered
security solutions across the globe. Prime competitors of the
company are Danaher Corp. (
). The stock currently bears a Zacks #3 (Hold) Rank.