Stanley says B & D merger on schedule

$4.5 billion deal expected to be done in first half of year

January 28, 2010|By Andrea K. Walker | andrea.walker@baltsun.com

Stanley Works Inc. said Tuesday that its $4.5 billion acquisition of Black & Decker is on track to be completed in the first half of the year and that it plans to keep several of the Towson power tool maker's executives in the new organizational structure.

Stanley used a quarterly earnings call to update analysts on the pending merger, which was announced in November.

While some Black & Decker divisions will be combined with those at Stanley, others will remain independent. Black & Decker's hardware and home improvement business will join with the mechanical access security business at Stanley. But Emhart, a Black & Decker company that makes rivets, screws and studs, will remain intact with the same management team.

Stanley executives will hold the top three positions, while Black & Decker chairman Nolan D. Archibald will become executive chairman and also co-chair of a "synergy steering committee" with John F. Lundgren, chairman and chief executive officer at Stanley. Tony Milando, Black & Decker vice president of operations for the power tools and accessories business, will co-chair a newly created "integration office" with a Stanley executive.

A new division called the Consumer Do It Yourself Business will be created by combining Black & Decker's power tools segment and the do-it-yourself operation at Stanley. Lundgren said six Black & Decker executives will remain on that team.

The "collaboration to the extent we've been allowed to do has been quite encouraging so far," Lundgren said during the conference call.

Black & Decker spokesman Roger Young said it is still unknown how many workers at the Towson campus could lose their jobs once the merger is complete.

Most of the 250 corporate workers there, including those in information technology, legal, human resources, marketing, and research and development, are likely to lose their jobs once the merger is completed at the end of the first quarter or beginning of the second quarter, Black & Decker has said.

Nonetheless, Young said the emerging corporate organization seems to bode well for Black & Decker.

"Certainly in terms of commitment to this location and the people here, there were very positive comments," he said in an interview after the earnings call.

Lundgren reiterated Tuesday that the merger will create a company with a dominant position in the hand and power tool business. While both companies sell in the rapidly growing markets of India and China, Black & Decker also brings a presence in Latin America.

Stanley expects the combined business to boost earnings per share by $1 in three years based on $350 million in cost savings and the opportunity for profit margin improvement. Cash flow also is expected to be more than $1 billion by the third year.

Stanley posted a fourth-quarter profit of $55.4 million despite a drop in revenue as it logged a $14 million tax benefit and as operating costs dropped 2 percent. Earnings included a 22-cent charge related to the Black & Decker deal.

An earlier version of this story misspelled Tony Milando's name. The Baltimore Sun regrets the error.


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