Shareholders of Black & Decker Corp. and The Stanley Works approved the combination of the two companies Friday in a deal that will create a multibillion-dollar juggernaut in the power and hand tools business.
In one of its last corporate acts as a stand-alone company, Towson-based Black & Decker convened a special shareholders meeting shortly after 9 a.m. and got approval to sell itself to Stanley in a $4.5 billion, all-stock deal. About the same time, Stanley shareholders voted in favor of the deal at the company's headquarters in New Britain, Conn.
The sale means the departure of a Fortune 500 company headquarters in the Baltimore region - leaving only Constellation Energy Group and Legg Mason Inc. - after a number of corporate offices have been lost to mergers and acquisitions.
The new company will be known as Stanley Black & Decker and will trade on the New York Stock Exchange under Stanley's existing ticker symbol, SWK.
The combination is expected to expand the toolmakers' reach in new and emerging markets. Stanley spokesman Tim Perra said the merger also makes sense because some of Stanley's tools and other products are sold through the same stores and to the same customers as Black and Decker's power tools. The businesses are complementary, he said.
"Obviously, shareholders agreed, which is nice," Perra said.
Together, the toolmakers had $8.5 billion in sales in 2009. Black & Decker's sales outpaced Stanley's by about $1 billion, but Stanley was able to buy its former rival because its stock market value was higher - the result of its growing security hardware segment.
As part of the merger, a round of job cuts is expected to eliminate up to 10 percent of the combined work force of more than 35,000 people. As many as 250 people could lose their corporate-level jobs at Black & Decker's headquarters in Towson.
The last meeting for shareholders of Black & Decker, a 100-year-old company with deep roots in the Baltimore area, took place in another state, at a Marriott hotel near Washington Dulles International Airport in Northern Virginia.
In the past, Black & Decker has held shareholder meetings at or near its Towson headquarters. Company officials declined to comment on why this one was held outside Maryland.
More than 49 million Black & Decker shareholder votes were tallied - representing 80 percent of the outstanding shares. Ninety-nine percent of the votes were in favor of the merger, according to Black & Decker's corporate secretary, Natalie Shields.
Most of the votes were counted by proxy; only two independent shareholders attended Friday's meeting in a large conference room with rows of vacant chairs.
Brooke Lynch, 69, who owns 35 Black & Decker shares and spoke at the 15-minute meeting, told Chairman and Chief Executive Nolan D. Archibald that the Stanley merger was a "disservice" to the company and its employees, and to the Baltimore community.
He accused Archibald of being motivated "strictly by greed." Archibald will remain part of the new company as executive chairman and could receive a $45 million "cost synergy bonus" in three years for helping to make $350 million in merger-related cuts.
"You'll come out of this smelling like a rose," Lynch said.
After Lynch's comments, Archibald said, "Thank you."
After the meeting, Archibald told The Baltimore Sun in a brief interview: "This merger had nothing to do with greed. It had to do with what was in the best interests of the shareholders."
Under the terms of the deal, Black & Decker shareholders received 1.275 shares of Stanley common stock, representing a premium of about 22 percent, according to the companies. The deal closed at 5 p.m. Stanley shareholders strongly supported the deal.
At a 10-minute meeting at Stanley headquarters in New Britain, about 80 people listened to John F. Lundgren, Stanley's chairman and chief executive, explain that the board unanimously recommended the creation of Stanley Black & Decker.
About 68 million Stanley proxies were returned for the merger vote, and nearly 99 percent voted to issue common shares to complete the all-stock merger. About 97 percent voted to amend Stanley's incorporation to accommodate the merger.
Lundgren, who will no longer be board chairman after the merger, barred questions at the meeting and was unavailable for an interview, though he circulated with shareholders briefly afterward.
"It's a great day for Stanley," he told a group of shareholders.
A larger portion of Stanley shareholders disagreed with a bonus plan that includes a $45 million reward to Black & Decker's Archibald if the combined company sheds costs. About 84 percent of the shareholders approved the executive pay package.