Stanley Works To Buy Black & Decker For $4.5 Billion In Stock

   DOW JONES NEWSWIRES 
 

Stanley Works (SWK) agreed to buy Black & Decker Corp. (BDK) for $4.5 billion in stock, combining two household names in the market for tools.

Both companies' boards have approved the deal, which will give Black & Decker shareholders 1.275 shares of Stanley for each share. Based on Monday's closing price, that values Black & Decker at $57.57, a 22% premium.

Stanley shareholders will hold a small majority stake in the combined company, at 50.5%.

Wall Street applauded the deal, sending both companies' shares up in after-hours trading. Black & Decker shares were recently up 20%, to $56.59, while Stanley shares rose 3%, to $46.52.

The companies expect the combination will result in savings of $350 million a year and see the deal adding $1 a share to earnings by the third year.

They also touted their complementary products and market fits. Black & Decker's position in power tools, security hardware products and engineered fasteners has no significant overlap with Stanley's product and service offerings in hand tools and mechanical and electronic security products.

John F. Lundgren, chairman and chief executive of Stanley, will be president and CEO of the combined company. Black & Decker leader Nolan D. Archibald will be executive chairman for three years.

Archibald said "While we are pleased with the initial premium of approximately 22%, the driving motivation of the transaction is the present value of the $350 million in annual cost synergies and the combined financial strength and product offerings of the merged companies."

-By Jay Miller, Dow Jones Newswires; 212-416-2355; [e-mail]