Did B&D pay too much?


November 19, 1990|by Kim Clark

With its bold purchase of Emhart Corp. in 1989, Black & Decker gained a huge manufacturing and research conglomerate that traced its heritage back to the mid-19th century.

Most stock analysts agree that Emhart's businesses fit well with Black & Decker's tool and housewares empire. But there is controversy over whether Black & Decker paid too much for Emhart.

Since the purchase, Black & Decker Chairman Nolan Archibald has moved aggressively to trim the company.

He has sold -- or has reached agreements to sell -- seven Emhart subsidiaries, worth a combined $700 million. He also sold -- for $17 million -- Emhart's campuslike headquarters, set in suburban Farmington, Conn., a short drive from Hartford.

But those deals have fallen short of Mr. Archibald's stated goal: selling $1 billion in Emhart assets by mid-1990.

He has been unable to sell Emhart's huge government-contracting operation, made up of the former Advanced Technology Inc. and Planning Research Corp.,based in Northern Virginia.

Meanwhile, he has sold off some hardware-related Emhart subsidiaries, such as True Temper, which makes garden tools.

Emhart's corporate ancestor was the P & F Corbin Co. founded in 1854 to make brass ornaments. In 1902, Corbin merged with three other Connecticut hardware-makers and formed the American Hardware Co.

The name changed to Emhart in 1964, when American merged with Emhart Manufacturing Co.

Emhart's character changed dramatically in 1985, when Peter Scott, a former United Technologies Corp. executive, became chairman and began an aggressive asset sale and acquisition spree.

Mr. Scott sold some old-line companies such as plants manufacturing shoe equipment, and bought up high-technology companies such as Planning Research Corp., an information-systems consulting business.

By 1988, Emhart had grown to 30,000 employees and reported earnings of $126 million on revenues of $2.76 billion.

Emhart's largest subsidiaries were:

* Kwikset locks, the biggest U.S. producer of residential locks.

* Russwin and Corbin brand industrial and commercial locks.

* True Temper garden tools and golf shafts. True Temper says its golf shafts are used by 90 percent of the world's golf professionals. Black & Decker sold the hardware division to the Huffy Corp. for $55 million in October of 1990.

* Price Pfister plumbing equipment. Emhart bought the nation's third-largest producer of plumbing supplies for $238 million in 1988.

* GardenAmerica, a producer of lawn-irrigation systems. Emhart bought the company for $84 million in 1988. Black & Decker reached an agreement to sell GardenAmerica to James Hardie Ltd., an Australian company, for $40 million this fall.

* Chemical fastening companies, including the Bostik adhesive brand, which had sales of $250 million in 1988. Black & Decker sold Bostik to Orkem S.A. for $345 million in cash in January of 1990. Black & Decker indicated the company had earned about $11 million in 1989.

* Makers of glass-making machinery, including the Hartford and Sundsvalls names.

* Arcotronics, a Bologna, Italy-based company that makes electronic equipment such as capacitors. Arcotronics was sold to Nissei Electric Co for $80 million.

* The Texon footwear materials company, which was sold for $125 million to a British machinery company in early 1990.

* Advanced Technology Inc., a Reston, Va.-based governmen contractor that Emhart bought for $140 million in 1988.

* Planning Research Corp., a McLean, Va.-based government contractor. Emhart bought the company for $220 million in 1986.

Black & Decker merged the two Virginia companies in the summer of 1990 into one 3,500-worker unit with approximately $700 million a year in revenues. The company, renamed PRC, was put up for sale last year for about $600 million, but there were no takers.

One division of PRC, called Medic, which runs medical computer systems, was sold to a management team in the summer of 1990.

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