Black & Decker says it will sell True Temper unit to Cornerstone Deal, worth more than $200 million, fits its strategy


June 30, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Moving for the second time this year to tighten its focus on power tools and hardware, Black & Decker Corp. said yesterday that it will sell control of its True Temper Sports golf club shaft business to Cornerstone Equity Investors LLC for more than $200 million.

In a recapitalization deal, Towson-based Black & Decker will receive $202.7 million in cash and $4 million in preferred and common stock. In return, New York-based Cornerstone will get a 94 percent stake in True Temper Sports, with Black & Decker holding the remaining 6 percent.

"This maximizes the value to us," said Barbara Lucas, a Black & Decker spokeswoman. "Black & Decker gets a large cash payment and some interest in a company that is doing very well."

The deal, scheduled to become final in the third quarter, comes six weeks after Black & Decker agreed to sell its household-products business in the Western Hemisphere to Windmere Durable Holdings Inc. for $315 million. The Windmere deal became final Friday.

Black & Decker announced its intention to sell the two businesses -- and its Emhart glass-making machinery business -- in January as part of a broad restructuring plan aimed at improving competitiveness.

The plan, which includes streamlining the core businesses -- power tools, Price Pfister plumbing products, lock-set brands, and fastening and assembly systems -- is aimed at saving the company $100 million annually. Ultimately, it will eliminate 3,000 jobs, or 10 percent of the company's work force. In January, Black & Decker said it expected to get $500 million for the three businesses on the block. But with two of the three deals done, the total well exceeds $500 million. And Black & Decker said yesterday that is is confident the proceeds will be $525 million to $575 million.

"These are good numbers," said Nicholas P. Heymann, a New York-based analyst for Prudential Securities. "We're going through the process of transforming this company. And the process is going better than expected. The costs are less, and the proceeds are more."

Heymann estimated that Black & Decker would net about $30 million to $35 million for the Emhart glass-making machinery business.

Black & Decker announced the True Temper sale after financial markets closed yesterday. Shares rose 12.5 cents, to $59.8125.

True Temper, the world's largest producer of steel and graphite golf shafts, also makes specialty tubing products for the bicycle and sporting goods industries. The Memphis, Tenn.-based company, which employs 670 worldwide and operates seven facilities, accounted for about $83 million -- less than 2 percent -- of Black & Decker's $4.9 billion in sales last year.

Scott Hennessy, president of True Temper, who will stay with the new management, said in a statement that employees should jTC see a "smooth and seamless transition." He called Black & Decker a "wonderful parent company" responsible for transforming True Temper from a manufacturer into a huge consumer brand.

Under its new owner, True Temper will be more aggressive about seeking new types of customers, he said.

"We may be looking into other products that we're not currently in, such as ski equipment, archery -- anything that requires precision tubing," Hennessy said.

Cornerstone, one of the nation's largest private equity investors, has owned or financed 80 companies since its founding in 1984.

In a statement, Mark Rossi Sr., managing director and a Cornerstone founder, said, "We are very excited about partnering with True Temper's management team and continuing the rapid growth of the company through investments in technology."

Pub Date: 6/30/98

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.