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Stanley powers up home asset sale

by Lou Whiteman | Published July 18, 2012 at 10:33 AM

Toolmaker Stanley Black & Decker Inc., which doubled down on the home improvement sector during the great recession, said Wednesday, July 18, it was curtailing acquisitions and would consider options for its hardware and home improvement business.

The New Britain, Conn.-based company, the product of Stanley Works' 2010 purchase of Black & Decker Corp. for $4.5 billion, said the assets put on the block had 2011 sales of $940 million. The unit, which includes Baldwin knobs, Kwikset locks and Price Pfister faucets, were primarily acquired by Black & Decker in the late 1980s in an attempt to diversify away from its core power tool operations.

Stanley executives have long expressed an interest in exploring a sale of the unit, telegraphing a potential deal to analysts as far back as April 2011. Goldman Sachs Group Inc. had been retained to explore options, the company said on Wednesday, saying that it hopes to fetch cash proceeds "significantly in excess of $1 billion" for what it called "a healthy and profitable business."

Analysts have said an auction could attract both strategic and private equity investors, with strategics potentially interested only in individual businesses in which they already have a presence and could extract significant synergies.

Stanley also said it is currently evaluating the purchase of an engineered fastening franchise with $500 million in sales. Should both transactions happen the company said it would use proceeds from the divestiture to finance the acquisition, with other cash proceeds going towards share repurchases and deleveraging.

Company chief operating officer James Loree in a statement said that no matter the outcome of the sale process, Stanley intends to shift away from dealmaking in favor of integrating existing businesses and focusing on building its sales in emerging markets and new technologies.

"We are announcing today that the company plans to curtail any other major bolt-on acquisition activity for a period of at least 12 to 18 months," Loree said, adding that better integration and a push to grow sales "have the potential to boost the company's organic growth rate by two or three points" in the coming years.

Loree said Stanley could continue to pursue "small complementary strategic transactions" in emerging markets.

Stanley also cut its full-year forecast due to lower volumes in its higher-margin security and industrial segments as well as weakness in foreign exchange rates. The company said it now expects to earn between $5.40 and $5.65 per share for the year, down from prior estimates that it would make between $5.75 and $6 per share.

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Stanley powers up home asset sale

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