Just within a few days of its second quarter 2012 earnings
release and floating of $750 million debentures, Stanley
Black & Decker, Inc. ( SWK )
came up with yet another major announcement. This time it's about
an agreement to acquire Hong Kong based leading manufacturer and
supplier of specialty engineered fastening technologies,
The other parties involved in the transaction are CVC Capital
Partners and Standard Chartered Private Equity Limited. The
acquisition price has been settled at $850 million, all of which
will be paid in cash by Stanley Black & Decker. Completion of
the acqisition, which is still subject to approvals is expected to
be in the fourth quarter 2012.
Infastech has a diversified client base in the industrial,
electronics, automotive, construction and aerospace end markets in
over 150 countries across the world. Well-known brands include
Avdel®, ELCO® and iForm TM . Prime end markets for the
combined business will include automotive manufacturing and
The acquisition will enhance Stanley's revenue generation
capacity as well as add around 2,000 employees to its workforce.
Earnings accretion is expected immediately with roughly 15 cents in
the first year of acquisition and 35 cents in the third year. It is
anticipated that there would be annual cost savings of roughly $25
million by the third year while the first two years of acquisition
will see $25-$30 million of acquisition related charges.
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. Infastech acquisition is
likely to fulfill Stanley's goal of generating above 20% revenue
from the emerging markets. Infastech together with Stanley's
engineered fastening platform, Emhart are likely to generate 40% of
their combined revenue in the Asia-Pacific region, which will
likely push the overall company's revenue generation from this
region to 16%.
The current Zacks Consensus Estimate for the third quarter of
2012 is $1.46, representing a year-over-year increase of 9.09%.
Estimates for the fiscal years 2012 and 2013 are $5.50 and $6.36,
reflecting annual growth of 5.01% and 15.61%, respectively.
Stanley Black & Decker manufactures tools and engineered
security solutions across the globe. Prime competitors of the
company are Danaher Corp. (DHR) , Makita Corp. (MKTAY) , and Snap-on Inc. (SNA) . The stock currently bears a Zacks #5 (Strong
DANAHER CORP (DHR): Free Stock Analysis Report
(MKTAY): ETF Research Reports
SNAP-ON INC (SNA): Free Stock Analysis Report
STANLEY B&D INC (SWK): Free Stock Analysis
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