Stanley Works (SWK) and Black & Decker (BDK) Agree to Merge In $4.5 Billion Deal

November 2, 2009 4:47 PM EST

Stanley Works (NYSE: SWK) has agreed to acquired Black & Decker (NYSE: BDK) in a merger that will create an $8.4 billion global industrial leader in an all-stock transaction valued at $4.5 billion. The companies will be re-branded into Stanley Black & Decker in a deal that is expected to close sometime in the first half of 2010.

The merger has caused a 20 percent jump in the stock price for Black & Decker in the after-hours market.

Black & Decker shareholders will receive a fixed ratio of 1.275 shares of Stanley common stock for each share of Black & Decker common stock that they own as of October 30, 2009. This gives an implied premium of 22.1 percent to the Black & Decker share price.

Upon closing Stanley shareholders will own approximately 50.5% of the equity of the combined company and Black & Decker shareholders will own approximately 49.5%.

Chairman and CEO of Stanley, John F. Lundgren, will become President and CEO of the combined company. Nolan D. Archibald, Chairman, President and CEO of Black & Decker, will be Executive Chairman of the combined company.

"This is a unique opportunity to bring together two great companies, each with first-rate brands, and provide enhanced opportunities to generate superior returns as we build on this new, larger platform," Lundgren said.

The rationale for both companies for the merger is that the combined company will create a brand of tool with greater worldwide recognition, with strong appeal towards retailers, commercial customers and individual consumers.

"Stanley and Black & Decker together will have a comprehensive offering across all major tool categories and greater resources to support continued expansion of our combined security and industrial businesses," Lundgren added.

The deal will create EPS accreation if about $1 per shares by year three and $350 million in cost synergies are expected.

Stanley has moved up 0.75 percent to $45.45, while Black and Decker has soared to $56.75, a 19.88 percent jump.

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