Strategy

Stanley Black & Decker to Buy Newell Tools

With the $1.95 billion acquisition, Stanley returns to dealmaking after a two-year moratorium and strengthens its presence in the global tool market.
Matthew HellerOctober 14, 2016
Stanley Black & Decker to Buy Newell Tools

Stanley Black & Decker is adding to its toolbox through a $1.95 billion deal with Newell Brands that includes the Irwin and Lenox industrial cutting, hand tool and power tool accessory products.

The acquisition of Newell’s tools unit is Stanley Black & Decker’s largest since it was created through the merger of Stanley Works and Black & Decker Corp. in 2010 and its first since it announced in 2013 a two-year moratorium on dealmaking to focus on paying down debt and operational improvements.

Newell Tools has revenues of about $760 million, with low to mid-single digit average sales growth since 2011, and more than 2,500 employees worldwide. Stanley said Newell’s brands, which also include Hilmor, will complement its global tools and storage business.

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“Newell Tools is an important step in our quest to further strengthen our presence in the global tools industry,” CEO James M. Loree said in a news release. “The addition of the iconic Lenox brand and very strong Irwin brand, as well as their associated power tool accessory and hand tool products, opens up exciting new sources of global growth in similar ways, albeit on a smaller scale, to what Black + Decker did in recent years.”

Stanley’s tools and storage products business accounted for roughly two-thirds of its $11 billion in revenue in 2015. The company is aiming to double in size by 2022, Loree said.

Prior to the moratorium, Stanley made such deals as the $850 million purchase of Infastech in 2012 and the $1.2 billion purchase of Niscayah a year earlier. It expects the Newell transaction will result in annual cost synergies of approximately $80 million to $90 million by year three.

“Although the purchase price is dilutive prior to synergies, Stanley has a solid history of meeting or exceeding synergy targets,” Wunderlich Securities analyst Liam Burke wrote in a note.

Newell, which owns more than 160 brands including Sharpie markers and Rubbermaid food containers, is divesting about 10% of its business portfolio to streamline operations following its acquisition of Jarden Corp. earlier this year.