Stanley Black & Decker To Buy Tools Business Of Newell Brands For $1.95 Bln

(RTTNews) - Stanley Black & Decker (SWK) announced it has entered into a definitive agreement to acquire the Tools business of Newell Brands for $1.95 billion in cash. Stanley Black & Decker expects the transaction to result in annual cost synergies of approximately $80 - $90 million by year three. The company expects the acquisition to be approximately $0.15 accretive to earnings per share in year one post-closing (increasing to approximately $0.50 per share by year three), excluding approximately $125 to $140 million of restructuring and other deal related costs and approximately $40 million of non-cash inventory step-up charges, which in the aggregate will largely be incurred during years one and two.

Stanley Black & Decker's CEO, James Loree, said: "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. Thus, the acquisition of Newell Tools, our first major acquisition since 2013, will provide both a source of inorganic growth in year one and an organic boost thereafter."

Newell Brands said the agreement has been reached in the context of a series of strategic changes announced last week related to the company's new corporate strategy. Net sales for the divested business were approximately $760 million for the last twelve months. Proceeds will be primarily used to pay down debt. If the transaction were to be completed on December 31, 2016, Newell Brands would expect normalized EPS dilution of approximately $0.15 on an annualized basis after the benefit of short term cost actions and lower interest expense related to accelerated debt repayment.