Said Tim Perra, a spokesman for Stanley: "We think the combined company would be able to take advantage of a resurgence in the market. But this really is a transition that makes a lot of sense no matter when."
Archibald said he was approached by John F. Lundgren, Stanley's chairman and CEO, about the possibility of a deal six months ago. They met for lunch two months later in New York when discussion got more serious and the plan began to move ahead. Archibald said they could be a bigger "powerhouse" in the marketplace as a combined company, with the potential to create $1 billion in free cash flow by 2012.
Dayrit, the Morningstar analyst, thinks Stanley is paying a fair price for Black & Decker. "It makes sense, bringing together two of the strongest brands in the tool market arena."
Although both companies are well-known tool names, their businesses have diverged in recent years and wouldn't duplicate each other much, said analyst Nicholas Heymann of Sterne Agee in New York. That lowers the chance that antitrust regulators would block the deal.
"It's pretty complementary," Heymann said, adding that the pneumatic nailers both companies make are "really the only major overlap that I'm aware of."
While Black & Decker's strength is power tools, Stanley has gone heavily into home-security systems and hardware such as hinges and window locks.
Analyst David S. MacGregor with Longbow Research in Independence, Ohio, thought Black & Decker should have gotten a higher price. "It's a difficult environment for them, but they have been through down cycles before. I'm a little confused why they felt they had to sell."
He speculated that Archibald, Black & Decker's CEO for 24 years, is nearing retirement and the company might not have an heir to replace him. Under the terms of the deal, Archibald would stay on as executive chairman for three years. Lundgren, head of Stanley, would be president and chief executive officer of the combined company.
Archibald would not speculate on his role beyond the three-year period.
Anxiety - and attempts to ease it - followed the announcement. As employees left the Black & Decker complex for the day, one said he was "a little distraught."
David Iannucci, Baltimore County's economic development director, said the loss of one of the state's remaining Fortune 500 companies is "of immediate concern" to the area, "but in the long term, we'll be most concerned about maintaining and retaining as much of the headquarters operations as possible."
