NEW BRITAIN, Conn. and
HOFFMAN ESTATES, Ill.,
Jan. 5, 2017 /PRNewswire/
-- Stanley Black & Decker (NYSE: SWK) ("Stanley Black & Decker" or "the company"),
an S&P 500 global diversified industrial company, and Sears
Holdings Corporation (NASDAQ: SHLD) ("Sears Holdings"), announced
today that they have entered into a definitive agreement under
which Stanley Black & Decker
will purchase the Craftsman brand from Sears Holdings. The
transaction 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 and royalty-bearing 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.
"As we continue our growth trajectory as a diversified
industrial company, we continue to look at opportunities to build
upon our world-class portfolio of franchises and brands to create
shareholder value. This transaction, which aligns squarely
with this strategy, also reflects an effective allocation of
capital particularly when viewed in the context of the recently
announced Mechanical Security sale. We've essentially freed
up capital trapped in a low-growth business to invest in organic
growth and EPS accretion," added Loree.
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. Craftsman has a storied history as an iconic American
brand and in Stanley Black &
Decker we have found a great owner that is committed to expanding
Craftsman and helping it to reach its potential outside of its
current channels. It's important for our members to know that we
will continue to sell Craftsman in-store and online at Kmart and
Sears, and Sears Hometown, and the structure of the transaction
will provide Sears Holdings with a significant upfront payment,
another payment in three years and an opportunity to participate in
the growth of the Craftsman brand in both our stores and at other
retailers selected and managed by Stanley
Black & Decker. Looking ahead, we will continue to take
actions to adjust our capital structure, meet our financial
obligations and manage our business to better position Sears
Holdings to create long-term value by focusing on our best members,
our best stores and our best categories."
Transaction Terms
Stanley Black & Decker will
pay Sears Holdings $525 million at
closing, $250 million at end of year
three, and annual payments on new Stanley
Black & Decker Craftsman sales through year 15 (2.5%
through 2020, 3% through January
2023, and 3.5% thereafter). The net present value of
all these cash payments is approximately $900 million. The license granted to Sears
Holdings will be royalty-free for 15 years, then 3%
thereafter.
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
company expects the sale of Craftsman branded products 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 transaction, 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 will
host a conference call with investors today, Thursday, January 5, 2017 at 09:00 am EST. A presentation which will accompany
the call will be available at www.stanleyblackanddecker.com and
will remain available after the call.
The call will be accessible by telephone at 1 (877) 930-8285 and
from outside the U.S. at 1 (253) 336-8297 (Conference ID 46963043);
also, via the Internet at www.stanleyblackanddecker.com. To listen,
please go to the web site at least fifteen minutes early to
register, download and install any necessary audio software. A
replay will also be available two hours after the call and can be
accessed at (855) 859-2056 or (404) 537-3406 by entering the
Conference identification number 46963043. The replay will also be
available as a podcast within 24 hours and can be accessed on our
website and via iTunes.
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. Learn more at
www.stanleyblackanddecker.com.
Sears Holdings Corporation (NASDAQ: SHLD) is a leading
integrated retailer focused on seamlessly connecting the digital
and physical shopping experiences to serve our members – wherever,
whenever and however they want to shop. 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 across categories important to them. The company operates
through its subsidiaries, including Sears, Roebuck and Co. and
Kmart Corporation, with full-line and specialty retail stores
across the United States. For more
information, visit www.searsholdings.com.
Stanley Black & Decker
Contacts
Investor
Contacts:
|
Greg
Waybright
|
|
Vice President,
Investor Relations
|
|
greg.waybright@sbdinc.com
|
|
(860)
827-3833
|
|
|
|
Michelle
Hards
|
|
Director, Investor
Relations
|
|
michelle.hards@sbdinc.com
|
|
(860)
827-3913
|
|
|
Media
Contacts:
|
Shannon
Lapierre
|
|
Vice President,
Communications/Public Relations
|
|
shannon.lapierre@sbdinc.com
|
|
(860)
827-3575
|
|
|
|
Tim Perra
|
|
Vice President,
Communications
|
|
tim.perra@sbdinc.com
|
|
(860)
826-3260
|
|
|
Sears Holdings
Contact:
|
|
|
Howard
Riefs
|
|
Director, Corporate
Communications
|
|
(847)
286-8371
|
Forward-Looking Statements
This press release contains forward-looking statements from
Stanley Black & Decker or Sears
Holdings which represent the respective company's expectations or
beliefs about future events and their respective financial
performance. Forward-looking statements are identifiable by words
such as "believe," "anticipate," "expect," "intend," "plan,"
"will," "may" and other similar expressions. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. Forward looking statements made in this
press release, include, but are not limited to, statements
concerning: the consummation of the purchase; investment in, and
rapid increase in sales and innovation of products carrying the
Craftsman brand; significantly increasing sales of
Craftsman-branded products in untapped channels; expanding U.S.
manufacturing footprint and adding jobs in the U.S.; the Craftsman
brand complementing and expanding Stanley
Black & Decker's existing operations; revenue
opportunities; and organic revenue growth and accretion to earnings
per share.
You are cautioned not to place undue reliance on these
forward-looking statements. These forward-looking statements are
not guarantees of future events and involve risks, uncertainties
and other known and unknown factors that may cause actual results
and performance to be materially different from any future results
or performance expressed or implied by such forward-looking
statements, including, but not limited to, the failure to
consummate, or a delay in the consummation of, the transaction for
various reasons; failure to successfully integrate the Craftsman
brand and achieve expected revenue opportunities; the seller
becoming insolvent or entering bankruptcy proceedings; or the
transaction-related costs and charges being greater than
anticipated.
Forward-looking statements made herein are also subject to risks
and uncertainties, described in the respective company's: 2015
Annual Reports on Form 10-K; subsequently filed Quarterly Reports
on Form 10-Q; and other filings made with the Securities and
Exchange Commission. In addition, actual results could differ
materially from those suggested by the forward-looking statements,
and therefore you should not place undue reliance on the
forward-looking statements. Neither Stanley
Black & Decker nor Sears Holdings makes any commitment
to revise or update any forward-looking statements made by it to
reflect events or circumstances occurring or existing after the
date of any of its forward-looking statements.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/stanley-black--decker-reaches-agreement-to-purchase-craftsman-brand-from-sears-holdings-300386277.html
SOURCE Stanley Black &
Decker