Stanley Black & Decker to buy Sears Holdings' Craftsman tool brand for $900 mn
06 January 2017
US power tools maker Stanley Black & Decker Inc on Thursday struck a deal to buy Sears Holdings Corp's Craftsman tool brand for $900 million, in order to expand its hand and power tools portfolio.
The proposed acquisition comes three months after Stanley Black & Decker acquired Newell Brands Inc's tool business for $1.95 billion. (See: Stanley Black & Decker to buy Newell Brands' tool business for $1.95 bn)
Under the terms of the proposed Craftsman tool brand acquisition, Stanley Black & Decker will pay $525 million in cash at closing, $250 million at end of year three, and annual payments to Sears Holdings of between 2.5 per cent and 3.5 per cent on new Stanley Black & Decker sales of Craftsman products for 15 years.
The transaction will give Stanley Black & Decker the rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the US 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 licence from Stanley Black & Decker, which will be royalty-free for the first 15 years after closing and royalty-bearing thereafter.
Today only approximately 10 per cent of Craftsman-branded products are sold outside of Sears Holdings and Stanley Black & Decker said that the deal will enable it to significantly increase Craftsman sales in these untapped channels.
Stanley Black & Decker said it expected Craftsman branded products to generate about $100 million of average annual revenue for the next 10 years.
"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 Loree.
"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 per cent in the past three years,'' he added.