Swiss company to buy Emhart Glass Black & Decker's sale of container maker is its 3rd big deal in '98

Restructuring

July 15, 1998|By Sean Somerville | Sean Somerville,SUN STAFF

Completing a divestiture plan aimed at focusing its energy on power tools and hardware, Black & Decker Corp. said yesterday that it will sell its glass container-making business to Bucher Holding A.G. of Switzerland for $194 million.

The sale of Emhart Glass, which will yield $150 million for the Towson-based company, is Black & Decker's third major deal this year.

"This sale, combined with the sale of our household products business in North America and Latin America, and the recapitalization of True Temper Sports, will yield aggregate gross cash proceeds of $711 million and net proceeds of approximately $550 million," said Nolan D. Archibald, chairman and chief executive officer of Black & Decker.

Those proceeds exceed the company's initial expectations of $500 million. Black & Decker shares rose $1.3125 in trading yesterday to close at $65.1875, an all-time high and a 67 percent increase since the beginning of the year.

"The stock and the company and the management are getting the respect they have deserved for a long time," said Stephen J. Dobi, an analyst with Goldman Sachs in New York.

Much of that respect has come with the execution of the company's restructuring plan, which was unveiled Jan. 27, when the share price was less than $43.

The plan included not only sale of Black & Decker's noncore businesses, but also the elimination of 3,000 jobs over two years through streamlining its remaining businesses: power tools, plumbing products, lock-set brands, and fastening and assembly systems.

The company also said it would buy up to 10 percent of its 95 million shares outstanding.

As part of the plan, Black & Decker sold its Western Hemisphere household-products business last month to Windmere Durable Holdings Inc. for $315 million. The company also announced the sale of a controlling interest in its True Temper Sports golf club shaft business to Cornerstone Equity Investors LLC for $202.7 million and $4 million in preferred and common stock.

The Emhart sale, which is expected to close by the middle of October, will transfer 1,100 jobs to Bucher Holding A.G., Switzerland's seventh-largest machinery maker. Together, the three deals will cut 5,000 jobs from Black & Decker's payroll.

Separately, Black & Decker's streamlining plans have cut 3,700 positions worldwide and added 1,300 for a net reduction of 2,400 jobs.

Ultimately, the company, which employed 30,000 at the beginning of the year, will have about 23,000 workers.

Black & Decker's 2,700 Maryland employees will not be significantly affected by the changes, officials said.

Analysts said they are impressed. Nicholas P. Heymann, an analyst for Prudential Securities in New York, said the company's net proceeds from the Emhart sale were much higher than he had expected.

"This shows that Black & Decker knows how to make good investments," he said. "They should be in the business of liquidating other companies."

Dobi, the Goldman Sachs analyst, said Black & Decker managed to get good prices because it maintained the businesses during some difficult times.

He said the company, newly focused on power tools and hardware, should outperform the market.

"A $70 stock at the end of the year is not out of the question," Dobi said.

Pub Date: 7/15/98

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