Stanley Black & Decker Reaches Agreement to Sell Hardware & Home Improvement GroupOctober 10th, 2012 by DWM Magazine
Stanley Black & Decker announced that it has entered into a definitive agreement to sell its Hardware & Home Improvement Group (“HHI”) to Spectrum Brands Holdings Inc. for $1.4 billion in cash. The transaction, which is subject to customary closing conditions including required regulatory approvals, is expected to close by the first quarter 2013, according to Stanley.
With 2011 revenues of $940 million, HHI is a provider of residential locksets, residential builder’s hardware and plumbing fixtures. With 90 percent of HHI’s revenues from North America and more than 50 percent of its revenue coming through U.S. home centers, the divestiture of HHI is a meaningful step in the continued diversification of Stanley Black & Decker’s revenue streams and geographic footprint, the company says.
The tax-efficient transaction is expected to generate after-tax cash proceeds of $1.3 billion. More than 50 percent of the proceeds from this divestiture will be used to repurchase shares and a smaller portion will go towards modest debt reduction, to ensure the company’s leverage ratios remain in its target range.
“The sale of HHI is consistent with our strategy of strengthening our position as a diversified industrial company while maintaining the significant upside potential of a housing market recovery through our $5 billion CDIY portfolio,” says Stanley president and chief executive officer, John F. Lundgren. “While HHI is a healthy and profitable business, its characteristics are inconsistent with Stanley Black & Decker’s strategic objectives of diversifying our revenue base through further expansion into targeted end markets with higher growth and margin profiles, including emerging markets. Going forward, we remain focused on executing the promising organic growth initiatives we discussed on our July earnings call that should boost the company’s organic growth rate by two to three points annually in the coming years.”