Stanley Black & Decker To Acquire Remaining 80 Percent Stake In MTD Holdings For $1.6 Billion, Creating Global Leader In Outdoor Products

Rhea-AI Summary

Stanley Black & Decker (NYSE: SWK) announced its acquisition of the remaining 80% stake in MTD Holdings for $1.6 billion in cash. Previously, SWK held a 20% stake in MTD, acquired in 2019. This strategic move aims to create a global leader in the $25 billion outdoor category, enhancing growth opportunities amidst rising trends in home and garden consumer engagement and electrification. The acquisition is expected to yield $100 million in annual cost synergies by 2025 and boost adjusted earnings per share by $0.50 in 2022, increasing to over $1.00 by 2025.

Positive

• Acquisition enhances market position in the $25 billion outdoor category.
• Expected annual cost synergies of approximately $100 million by 2025.
• Acquisition projected to be accretive to adjusted earnings per share by $0.50 in 2022, increasing to over $1.00 by 2025.
• MTD's EBITDA margin has improved significantly, with further potential for growth.

Negative

• One-time charges for integration and restructuring estimated between $175 million and $200 million.
• Non-cash charges (inventory step-up) expected between $125 million and $150 million.
• Acquisition is subject to regulatory approvals which may delay closing.

NEW BRITAIN, Conn., Aug. 17, 2021 /PRNewswire/ -- Stanley Black & Decker (NYSE: SWK) today announced that it has agreed to acquire the remaining 80 percent ownership stake in MTD Holdings Inc. ("MTD"), a privately held global manufacturer of outdoor power equipment, including Cub Cadet® and Troy-Bilt®, for $1.6 billion in cash. Stanley Black & Decker acquired a 20 percent stake in MTD in 2019.

"We have worked directly with MTD over the last 3 years and have been impressed with the quality of the management team, their talented employees and MTD's relentless dedication to innovation in the outdoor space," said Stanley Black & Decker's CEO James M. Loree. "The combination of businesses will create a global leader in the $25 billion and growing outdoor category, with strong brands and growth opportunities that align with two market trends driving our business – the consumer reconnection with the home and garden and electrification.  We have clearly identified multiple levers to drive growth and margin expansion and are looking forward to welcoming MTD's 7,500 employees to our Stanley Black & Decker family."    

MTD's Chairman, CEO and President Robert T. Moll said, "My grandfather founded MTD nearly 90 years ago, and I'm as proud of our history as I am excited about our future with Stanley Black & Decker. Both companies are proven leaders in our respective industries with iconic brands, world class capabilities and a passion for bringing new and innovative products to our consumers. I know we are partnering with an organization that will continue to deliver on our purpose of inspiring people to care for and enjoy the outdoors."

With over $2.5 billion of revenue in the last twelve months, MTD designs, manufactures and distributes lawn tractors, zero turn mowers, walk behind mowers, snow blowers, residential robotic mowers, handheld outdoor power equipment and garden tools for both residential and professional consumers under well-known brands like Cub Cadet® and Troy-Bilt®. MTD has state-of-the-art manufacturing facilities in North America and Europe, and a global distribution network.

Together Stanley Black & Decker and MTD have a compelling pathway to introduce new and innovative products for professional and residential outdoor equipment customers.  MTD has made significant progress in improving its EBITDA margin from 4.5% in 2018 to high single digits over the last twelve months and there is runway for further EBITDA margin improvement to the mid-teens over the next four years as cost and revenue opportunities are realized.

The Company expects the transaction to result in cumulative annual cost synergies of approximately $100 million by 2025.  Our planning assumption for 2022 carries revenue of approximately $2.6 billion and consolidated adjusted EBITDA over $230 million.  Using these assumptions, the acquisition is expected to be approximately $0.50 accretive to adjusted earnings per share in 2022, increasing to over $1.00 by 2025.  One time charges associated with the acquisition are expected to be $175 - $200 million of integration, restructuring and other deal related costs and approximately $125 - $150 million of non-cash charges such as inventory step-up, which in the aggregate will largely be incurred upon closing and during the first three years of ownership.  The total purchase price represents an adjusted LTM EBITDA multiple of approximately 8x.

Donald Allan Jr., President and CFO, commented, "The acquisition of MTD creates a multi-year roadmap for organic revenue, profitability and cashflow growth.  We expect to generate significant revenue synergies as we capitalize on the two companies' collective technology investments, strong brands and global customer relationships.  We have significant balance sheet flexibility supported by strong free cash flow generation to fund the MTD acquisition and to consider other capital deployment opportunities.  We are excited to begin the next phase of our journey with MTD to realize these benefits, deliver high-teens return on capital, and build an innovative outdoor products leader."

The acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to close in 2021 and will be funded with a combination of cash on hand and proceeds from debt incurrence, which we expect to include support by new credit facilities.

Stanley Black & Decker, an S&P 500 company, is a leading $14.5 billion global diversified industrial with 56,000 employees in more than 60 countries who make the tools, products and solutions to deliver on its Purpose, For Those Who Make The World. The Company operates the world's largest tools and storage business; the world's second largest commercial electronic security company; and is a global industrial leader of highly engineered solutions within its engineered fastening and infrastructure businesses. Learn more at www.stanleyblackanddecker.com.

Inspiring people to care for and enjoy the outdoors, MTD Holdings Inc is known for innovative and award-winning lawn mowers, snow blowers, trimmers, and outdoor power equipment for both residential and commercial markets. The company was founded in 1932 and is headquartered in Valley City, Ohio.  The MTD family of brands includes Cub Cadet®, Troy-Bilt®, Robomow®, Rover®, and WOLF-Garten® – all backed by a strong network of MTD support focused on uncompromising quality, service and value through advanced manufacturing. Products designed, manufactured, distributed, and sold by MTD can be found in retail outlets large and small all over the world. For more information, please visit www.mtdproducts.com.

Investor Contacts:

Dennis Lange
Vice President, Investor Relations
dennis.lange@sbdinc.com 
(860) 827-3833

Cort Kaufman
Director, Investor Relations
cort.kaufman@sbdinc.com 
(860) 515-2741

Christina Francis
Director, Investor Relations
christina.francis@sbdinc.com 
(860) 438-3470

Media Contacts:

Shannon Lapierre
Chief Communications Officer
shannon.lapierre@sbdinc.com 
(860) 259-7669

Debora Raymond
Vice President, Public Relations
debora.raymond@sbdinc.com 
(203) 640-8054

MTD Holdings Inc. Contacts: 

Heidi Ketvertis
Vice President, Marketing
hketvertis@mtdproducts.com 
(330) 558-7038

Erica Creech
Manager, Corporate Communications
ecreech@mtdproducts.com 
(330) 558-7285

Cautionary Note Regarding Forward-Looking Statements

Stanley Black & Decker makes forward-looking statements in this press release which represent its expectations or beliefs about future events and 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 Stanley Black & Decker's acquisition of the remaining 80 percent stake in MTD; MTD's business complementing and expanding Stanley Black & Decker's existing operations; cost and revenue synergies; growth and margin expansion opportunities; anticipated accretion, return on capital and one-time acquisition-related charges; and operational efficiencies.

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 known and unknown risks, uncertainties and other 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, Stanley Black & Decker's acquisition of the remaining 80 percent stake in MTD for various reasons; failure to successfully integrate MTD and achieve expected cost and revenue synergies; failure to achieve expected growth, margin expansion, accretion or return on capital; or the acquisition-related charges being greater than anticipated.

Forward-looking statements made herein are also subject to risks and uncertainties, described in: Stanley Black & Decker's 2020 Annual Report on Form 10-K, its subsequently filed Quarterly Reports on Form 10-Q; and other filings Stanley Black & Decker makes with the Securities and Exchange Commission. In addition, actual results could differ materially from those suggested by the forward-looking statements. Stanley Black & Decker makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statement.

 

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SOURCE Stanley Black & Decker

FAQ

What is the value of the acquisition of MTD by Stanley Black & Decker?

The acquisition is valued at $1.6 billion.

How much of MTD Holdings does Stanley Black & Decker own after the acquisition?

Stanley Black & Decker will own 100% of MTD Holdings after acquiring the remaining 80% stake.

When is Stanley Black & Decker expected to close the acquisition of MTD?

The acquisition is expected to close in 2021, pending regulatory approvals.

What are the anticipated synergies from the MTD acquisition?

The acquisition is expected to result in annual cost synergies of approximately $100 million by 2025.

How will the acquisition impact Stanley Black & Decker's earnings?

The acquisition is expected to be accretive to adjusted earnings per share by $0.50 in 2022, increasing to over $1.00 by 2025.