Stanley Black & Decker, Inc. Case
Stanley Black & Decker, Inc.
February 7, 2013
Introduction
From the start, the merger announced November 2, 2009, looked good on paper. Stanley Works agreed to buy Black & Decker for stock valued at a 22 percent premium in exchange with $3.6 billion in its stock. That was justified because Stanley got management and board control, and its shareholders were to own more than half of the stock, with the 50.5% of the stock in the combined company. This case not only explores shareholder value creation and transfer opportunities in merger and acquisition transactions, it also invites an examination of corporate governance issues surrounding CEO compensation. More important, the amount Stanley was paying above Black & Decker’s market capitalization was dwarfed by the value of cost cuts promised by the deal. These, of course, were no sure thing; achieving them depended entirely on management making them happen.
Business background and SWOT Analysis
The Stanley works was a hand tool company founded in 1843 while the Black & Decker was a power tool company established in 1910. Since the companies operated in similar lines of business, they had periodically discussed a strategic combination in long term. Although merger discussions had occurred in the early 1980s, the late 1980s and again in the early 1990s, it successful announced the good news in 2009.
SWOT analysis will give an understanding of the internal and external factors that are influencing the current business and industry. Based upon information provided in the case, it appears that new combined corporation has an abundance of strengths, with minimal weaknesses, that are currently affecting the company. There are several opportunities that the company could utilize to potentially increase revenues and help maintain a competitive advantage in the market. With the current threats of the economy and competitors, some of the opportunities may provide additional ways for Stanley Black
February 7, 2013
Introduction
From the start, the merger announced November 2, 2009, looked good on paper. Stanley Works agreed to buy Black & Decker for stock valued at a 22 percent premium in exchange with $3.6 billion in its stock. That was justified because Stanley got management and board control, and its shareholders were to own more than half of the stock, with the 50.5% of the stock in the combined company. This case not only explores shareholder value creation and transfer opportunities in merger and acquisition transactions, it also invites an examination of corporate governance issues surrounding CEO compensation. More important, the amount Stanley was paying above Black & Decker’s market capitalization was dwarfed by the value of cost cuts promised by the deal. These, of course, were no sure thing; achieving them depended entirely on management making them happen.
Business background and SWOT Analysis
The Stanley works was a hand tool company founded in 1843 while the Black & Decker was a power tool company established in 1910. Since the companies operated in similar lines of business, they had periodically discussed a strategic combination in long term. Although merger discussions had occurred in the early 1980s, the late 1980s and again in the early 1990s, it successful announced the good news in 2009.
SWOT analysis will give an understanding of the internal and external factors that are influencing the current business and industry. Based upon information provided in the case, it appears that new combined corporation has an abundance of strengths, with minimal weaknesses, that are currently affecting the company. There are several opportunities that the company could utilize to potentially increase revenues and help maintain a competitive advantage in the market. With the current threats of the economy and competitors, some of the opportunities may provide additional ways for Stanley Black