There could be more layoffs beyond the Black & Decker headquarters, though the companies have not yet targeted specific jobs. Black & Decker told employees in a memo that it expects "less than 10 percent of the combined company's work force to be affected," which means the possibility of several thousand job cuts overall. Together, they employ 38,000.
Under terms of the deal, Black & Decker shareholders would get 1.275 shares of Stanley common stock for each share of Black & Decker common stock. That's a premium of about 22 percent on Black & Decker's closing share price on Friday. The deal will work out to about $57 or $58 per share for Black & Decker shareholders, who saw their stock close at $47.34 Monday.
Stanley shareholders will own just over 50 percent of the equity of the combined company, with Black & Decker shareholders owning the rest. The companies said they expect the deal to close in the first half of 2010.
Black & Decker, with its DeWalt brand, is a leader in the professional power tools market and sells do-it-yourself tools under the corporate name. It has 20,000 employees worldwide. Stanley - a 166-year-old firm that sells tools under its name, plus such brands as FatMax and Bostitch - employs 18,000 people.
Both companies have been buffeted by the recession and housing-market collapse. Less demand for new construction and home-improvement projects has meant less need for tools.
In 2008, Black & Decker's profit dropped 43 percent, to about $294 million. Stanley's profit shrank 30 percent, to $225 million. Each has laid off workers in the past year.
"Both companies have been hit hard throughout the downturn, but Black & Decker more so," said Anthony Dayrit, an equity analyst with Morningstar Inc. Stanley has been more protected because it has an industrial product offering and a security business, he said.
Archibald and a spokesman for Stanley said that even though the steep drop in housing starts hurt sales, the economy had nothing to do with the decision to merge.
"If you look at our balance sheet and look at our cash flow, it had nothing to do with the economy," Archibald said. "Not only were we surviving, we were prospering. Both of our companies were doing extremely well in a very difficult economy. We had a very bright future. It was a question of if it would have been brighter with Stanley."
