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Stanley Black & Decker $SWK to Acquire @Craftsman Tools from Sears $SHLD for $900M

Stanley Black & Decker $SWK to Acquire @Craftsman Tools from Sears $SHLD for $900M

Sears Holdings initiated a formal process to explore strategic alternatives for its Kenmore, Craftsman and DieHard brands, and its Sears Home Services, with the assistance of Citigroup Global Markets and LionTree Advisors, as reported last year by ExitHub. The deal provides Stanley Black & Decker with the rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries. As part of the agreement, Sears Holdings will continue to offer Craftsman-branded products, sourced from existing suppliers, through its current retail channels via a perpetual license from Stanley Black & Decker, which will be royalty-free for the first 15 years after closing, then 3% thereafter. Today only approximately 10% of Craftsman-branded products are sold outside of Sears Holdings and the agreement will enable Stanley Black & Decker to significantly increase Craftsman sales in these untapped channels. “Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” said Stanley Black & Decker President and CEO James M. Loree. “This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels. We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online. To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S. This will add jobs in the U.S., where we have increased our manufacturing headcount by 40% in the past three years. Sears Holdings’ Chairman and Chief Executive Officer Edward S. Lampert stated, “We are pleased to reach this agreement, after determining that externalizing the Craftsman brand would accomplish our goals of driving value for Sears Holdings and positioning Craftsman for future growth. This transaction represents a significant step in our ongoing transformation to a membership focused business model.” Lampert, who is also the founder, chairman and CEO of ESL Investments, his hedge fund based in Greenwich, Connecticut, engineered today’s Sears Holdings by merging Kmart and Sears Roebuck in 2005. Existing sales of Craftsman products outside the Sears Holdings and Sears Hometown distribution channels, which will be assumed immediately upon closing by Stanley Black & Decker, were approximately $200 million over the last 12 months. The sale of Craftsman branded products is expected to contribute approximately $100 million of average annual revenue growth for approximately the next ten years. The transaction is expected to be accretive to earnings by approximately $0.10-$0.15 per share in year one, increasing to approximately $0.35-$0.45 by year five and to approximately $0.70-$0.80 by year ten, excluding approximately $20 million of deal-related costs. The deal, which was approved by the Boards of Directors of both companies, is expected to close during 2017, subject to customary closing conditions and regulatory approvals. Stanley Black & Decker, an S&P 500 company, is a diversified global provider of hand tools, power tools and related accessories, mechanical access solutions and electronic security solutions, healthcare solutions, engineered fastening systems, and more. Sears Holdings is a leading integrated retailer focused on seamlessly connecting the digital and physical shopping experiences. Sears Holdings is home to Shop Your Way, a social shopping platform offering members rewards for shopping at Sears and Kmart as well as with other retail partners. The company operates through its subsidiaries, including Sears, Roebuck and Co., founded in 1886, and Kmart Corp., founded in 1899, with full-line and specialty retail stores across the United States. Photo: Edward S. Lampert, Chairman and CEO, Sears Holdings Corp, and ESL Investments.]]>