Black & Decker, Stanley deal has history 

Posted: 11:11 am Tue, November 3, 2009
By Danielle Ulman
Daily Record Business Writer

The seeds of the marriage between Black & Decker Corp. and The Stanley Works were sown nearly three decades ago.

Black & Decker’s CEO Nolan D. Archibald said in a conference call with analysts Tuesday morning that leaders at the companies had met three different times over a 28-year period to see if a merger might work, but the discussions bore no fruit until the companies announced a $4.5 billion all-stock merger Monday.

“This is a romance that started approximately 28 years ago,” he said.

The difference this time was that when Archibald and John Lundgren, CEO of Stanley, sat down for lunch six months ago and then again two months later, the two men realized the good fit — complementary tool lines with the possibility of cost synergies of $350 million a year.

Archibald denied that the venture, which will yield Stanley Black & Decker, headquartered in New Britain, Conn., had much to do with the economy.

“It had nothing to do with the current economic condition,” he said. “Both firms were weathering the economic conditions very well. Both companies had a very bright future on a standalone basis. They have an even brighter future together.”

Lundgren, who will head up the new company with Archibald as executive chairman for three years, said the integration of the two companies represents an enormous challenge.

“I would say the record speaks for itself that we’ve never taken on anything of this magnitude,” he said.

Stanley has created a steering committee to guide the transition, including an “A-team” from Stanley. Now that the merger has been announced, Lundgren said his company is in a position to work with Black & Decker to find counterparts for the team leaders at Stanley.

“We feel there’s a very high probability of meeting or achieving the goals we’ve set,” he said.

Those goals include cost synergies through cuts to corporate overhead costs, eliminating overlapping distribution centers, business unit consolidations and purchasing strength.

Both Black & Decker and Stanley have made significant cost cuts over the past few years, and Archibald said making any additional cuts separately would have cut the companies to the “bone” and impaired growth when the economy recovers.

“That’s why this thing was so attractive…[it] gave us the opportunity to cut costs,” Archibald said. “With no increase in sales, we’re going to have substantial cost benefits.”

About 10 percent of the work force at both companies — Black & Decker employs about 20,000 people and Stanley has 18,000 employees — will likely lose their jobs. Although the power tools division will remain headquartered in Towson, Black & Decker said that most of the 250 corporate jobs located in Maryland will not be maintained.

Shares of Black & Decker’s stock opened trading Tuesday up 24 percent at $58.88. Shares of Stanley’s stock opened at $47.55, up 5 percent from Monday night’s close.