Monday, November 2, 2009

Stanley Works, Black & Decker to merge (BDK, SWK)

Just announced is what on the surface looks like a "merger of equals" between toolmakers Stanley Works (SWK) and Black & Decker (BDK).

What's not quite equal is going to be the stock performance.

The merger is all stock, with Black and Decker shareholders receiving 1.275 shares of Stanley Works for each BDK share owned.

As of the close, this WOULD be a $57 offer for BDK, about a 22% premium, but it's trading after hours around $53, on expectations that SWK shares will trade down.

The $350million in cost synergies would amount to about 14% of the firms' combined operating costs - not a bad number, although it's probably spread across gross profits also.

From the release:

-->>EPS Accretion Of Approximately $1.00 Per Share Projected By Year Three;
-->>$350 Million In Cost Synergies Expected
-->>Black & Decker Shareholders To Receive Fixed Ratio Of 1.275 Shares Of Stanley Common Stock For Each Share Of Black & Decker Common Stock

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