8.3% stake in Black & Decker sold by Newell Co. Towson-based company's shares fall $1.31, to $48.56

March 04, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Black & Decker Corp. shares fell about 2.6 percent yesterday after Newell Co. said it had sold its 8.3 percent stake in the Towson-based company for about $395 million.

Freeport, Ill.-based Newell, which makes Levolor blinds, Berol pens and other household goods, sold almost 7.9 million shares of Black & Decker common stock to Goldman Sachs & Co. for $48.625 per share.

Black & Decker shares fell $1.3125 to $48.5625 as 2.2 million shares -- four times the daily three-month average -- changed hands.

"I think the reason the stock is down is just related to the Newell transaction," said Virginia Shelley, manager of investment relations for Black & Decker.

"We wouldn't anticipate any long-term adverse impact on the stock."

Newell acquired the shares in transactions dating to 1990 in an agreement with Black & Decker. At the time, Black & Decker eyed Newell as a business partner or as a potential white knight that would save the company from a hostile takeover, said Cliff Ransom, an analyst with State Street Research in Boston.

"Black & Decker is not worried about a takeover," he said. "There's no expanded relationship with Newell. It became a purely financial relationship."

Black & Decker shares, which traded at about $39 two months ago, rose sharply after the company announced in late January that it would sell most of its ailing household products business and cut 3,000 jobs companywide. Last month, the stock broke the $50 barrier.

Newell said the stock sale will result in a pretax gain of $200 million, meaning that the company will have doubled its investment. "It made sense to exit the stock, take the gain and put the money to work elsewhere," Ransom said. "It should not be construed as reflecting negatively on Black & Decker."

John J. McDonough, Newell's vice chairman and chief executive officer, said he was pleased with the company's investment in Black & Decker.

"At this time, we see many opportunities in the marketplace, and we feel our stockholders would be better served if we used the proceeds for strategic investments."

As part of their agreement, Black & Decker gave Newell the right to name one "mutually acceptable" candidate for the Towson company's board. With the stock sale, Newell gave up that right.

Black & Decker said, however, that it will ask Newell nominee M. Cabell Woodward, a retired ITT Corp. executive, to remain on the board.

Pub Date: 3/04/98

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