The hot news coming down the pipe today revolves around the announcement that Stanley Black and Decker has bought 20 percent of MTD shares for $234 million in cash. Under the terms of the new agreement, SBD has the option to purchase the remaining 80 percent on July 1, 2021.
Stanley Black and Decker, an S&P 500 company, is the parent company to DeWalt, Craftsman, Irwin, Lenox, Bostitch, and more. With their buying out 20% of MTD, they’ve also now got their proverbial fingers in the Cub-Cadet, Troy-Built, Remington, Robomow, Rover, Wolf-Garten, and Yard Machines “cookie jars” as well.
Stanley Black and Decker, On the Purchase…
“This investment in MTD increases our presence in the $20 billion global lawn and garden market in a financially and operationally prudent way. We have always viewed outdoor products as an attractive growth category for us to expand our presence beyond handheld electric products. This transaction gives us the opportunity to do that with a world class partner. MTD has a first-rate management team, talented employees and a mission, values, and commitment to innovation that are very closely aligned with our own, and we are excited to move forward with them.”
-James M. Loree, Stanley Black and Decker President and CEO
Basically, this move toward a potential full-scale corporate buyout places Stanley Black and Decker in a better position to capitalize on the growing lawn and garden sector of the market. MTD brands, which have a rich tradition of manufacturing and distributing mowers, snow blowers, trimmer, chainsaws, and other OPE, showed 2017 revenues north of $2 billion.
Benefits of the Purchase
Both companies look at the new partnership as an opportunity to share costs and revenues while improving operational efficiency. Both companies look at this new partnership as a means to drive innovation in both Pro and residential outdoor equipment markets.
“MTD and Stanley Black & Decker are both proven leaders in our respective industries with iconic brands and world-class capabilities. We’re both passionate about innovation with complementary businesses. Ultimately, this will give us more resources to bring really exciting products to our consumers.”
–Robert T. Moll, MTD Chairman and CEO
The purchase, which is subject to regulatory approval and closing procedures, should wrap up by early 2019. As the transaction becomes finalized, Stanley Black and Decker will appoint two representatives to the 11-man MTD Board of Directors. Should SBD choose to purchase the remaining 80-percent stake in MTD, both companies have already agreed to valuation based on MTD’s expected 2018 earnings. A sharing arrangement on any future earnings is in place as well.
