Stanley Works to buy Black & Decker

Two leading tool and equipment makers, Stanley Works and Black & Decker, announced on Monday that they had agreed to merge in an all-stock transaction valued at about $4.5 billion.┬á Stanley is a diversified industrial company that sells hand tools and construction equipment, while Black & Decker is known for its power tools, and the combination would merge two companies whose product lines appear to go well together.┬á "Our lines complement each other," Black & Decker chief executive Nolan Archibald said in an interview. "From a product point of view and a geographic point of view we have an opportunity of putting these two organizations together and coming up with significant cost savings."┬á Archibald also said the deal would result in $350 million in cost savings, as well as the improved finances of a more diversified company. The two companies also expect about $1 billion in free cash flow from the combined businesses by the end of the third year.┬á "With a billion dollars in cash flow, our combined business development team and a very full acquisition pipeline gives us the opportunity to continue to build the growth platforms that are out there," said John Lundgren, StanleyÔÇÖs chief executive officer.┬á Lundgren said the all-share deal represents a ÔÇ£unique opportunity.ÔÇØ┬á ÔÇ£Stanley and Black & Decker together will have a comprehensive offering across all major tool categories and greater resources to support continued expansion of our combined security and industrial businesses,ÔÇØ said Lundgren.┬á The plan to join the two companies still needs regulatory backing, but once the deal is finalized, Archibald would become the executive chairman for three years, with StanleyÔÇÖs chairman and chief executive, John Lundgren, as president and chief executive of the combined company.┬á The deal is expected to close in the first half of 2010, and Stanley shareholders would own about 50.5 percent of the combined company, while Black & Decker shareholders would own about 49.5 percent.