Blog Coverage Stanley Black & Decker on Deal-Making Spree, Sells Mechanical Security Business

Upcoming AWS Coverage on RBC Bearings Post-Earnings Results

LONDON, UK / ACCESSWIRE / December 22, 2016 / Active Wall St. blog coverage looks at the headline from Stanley Black & Decker Inc. (NYSE: SWK) as the Company announced on December 21, 2016, that it has entered into a definitive agreement with Dormakaba for the sale of its Mechanical Security unit for $725 million in cash. The transaction, subject to customary closing conditions, requires regulatory approvals and is expected to close in the first quarter of 2017. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of Stanley Black & Decker’s competitors within the Machine Tools & Accessories space, RBC Bearings Inc. (NASDAQ: ROLL), reported on November 02, 2016, results for the second quarter of fiscal year 2017. AWS will be initiating a research report on RBC Bearings in the coming days.

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Breaking down the agreement

Under terms of the agreement, Stanley Black & Decker will sell its hardware brands, such as, BEST Access, phi Precision, and GMT, which offered collective LTM (Last Twelve Months) revenue of $270 million and EBITDA of about $52 million. The transaction, however, excludes the remaining part of the firm’s mechanical security business, Sargent, and Greenleaf, which reported approximately $50 million LTM revenues and are not included in the sale to Dormakaba. Additionally, Stanley Black & Decker would retain the electronic security unit with LTM revenues of $1.5 billion and automatic doors business with LTM revenues of $0.3 billion.

The Company

Stanley Black & Decker was formed on November 02, 2009, when two home improvement product manufacturers, Stanley Works and The Black & Decker announced the creation of a global industrial leader worth $8.4 billion in an all-stock transaction valued at about $4.5 billion.

Stanley Black & Decker is a leading provider of power tools, hand tools, and related accessories, mechanical access services and solutions, electronic security systems, including products for several industrial applications. The firm operates primarily through its three segments, Tools & Storage, Security, and Industrial.

A Goldman Sachs Driven Deal

Stanley Black & Decker initiated talks with Goldman Sachs Group Inc. (NYSE: GS) regarding the sale process of its mechanical locks business, on October 13, 2016, a day after Newell’s acquisition was announced. The power tools manufacturer views this segment of the business as a non-core asset and planned to sell it as per its refocusing strategy. The locks business 12-month earnings amounted to about $70 million and is expected to generate about $1.00 billion after the execution of the deal.

Stanley’s Business Refocus

Stanley Black & Decker announced in 2013, that it would put deal-making to a halt, and prioritize clearing the debts, improve operations, and offering greater value to shareholders. The firm concluded its 3-year M&A drought, on October 12, 2016, where it announced the acquisition of Tools Business of Newell Brands for approximately $1.95 billion in cash. This acquisition brought popular power tool accessory brands such as Irwin® and Lenox® under the firm’s portfolio. The acquisition was the biggest deal since the creation of Stanley Black & Decker in 2009.

The firm refocusing strategy is based primarily on tool industry and electronic security businesses, where it plans to establish itself as the world leader. Stanley Black & Decker promoted this probable sale of Door-Locks unit to deploy capital in a more accretive and growth oriented format.

Stock Performance

Stanley Black & Decker’s share price finished yesterday’s trading session at $116.78, slightly slipping 0.37%. A total volume of 901.94 thousand shares exchanged hands. The stock has advanced 2.47% and 12.69% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company have surged 11.64%. The stock is trading at a PE ratio of 17.74 and has a dividend yield of 1.99%.

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