Stanley Sees Cost Savings In Black & Decker Deal

ASHLEY M. HEHER

CHICAGO (AP) — Tool makers Stanley Works and Black & Decker Corp. are betting that together they can wring out more profit and better position themselves for a housing market recovery than they could apart.

In an all-stock deal that would create the largest tool maker in a fragmented market, Stanley Works on Monday agreed to pay $3.46 billion for rival Black & Decker.

The deal will cut costs by $350 million within three years, likely in part through an unspecified number of job cuts, and increase earnings per share by $1 within three years, the companies said. Executives said most of the savings will come from reducing corporate overhead and consolidating business units.

There is little overlap in the companies' products, said James C. Lucas, managing director of Janney Montgomery Scott LLC. Stanley is a leader in consumer and industrial hand tools and security, and Black & Decker in power tools.

While the companies haven't seen a sharp rebound in business, there have been signs that demand is stabilizing. That might be why both companies decided to combine now, said Morningstar analyst Anthony Dayrit.