Stanley Black and Decker has announced it has completed the previously announced sale of its Hardware and Home Improvement Group to Spectrum Brands Holdings for $1.4 billion in cash.
As previously disclosed, this tax-efficient transaction is expected to generate after-tax cash proceeds of $1.3 billion. Over 50 percent of the proceeds will be used to repurchase shares and a smaller portion will go towards modest debt reduction. The company will reinvest the remaining proceeds, together with existing offshore capital, to fund the previously announced Infastech acquisition, which is expected to close in the next 45 days. Also as previously communicated, the company expects modest earnings per share dilution of $0.10 to $0.20 in 2013 which represents the net result of the sale of HHI partially offset by the favorable impact of the share repurchases and accretion from Infastech. Stanley Black and Decker plans to disclose exact details of the estimated financial effects of these transactions on 2013 results when it announces its fourth quarter and full-year 2012 results and provides 2013 guidance in late January.
The company’s 2012 full-year financial results will be adjusted to exclude the results of HHI, representing approximately $0.65 of EPS. Other than the exclusion of HHI, the company’s previously provided 2012 guidance for continuing operations (excluding Merger and Acquisition charges) remains unchanged and hence is $4.60, implying a fourth quarter 2012 EPS of $1.28. The company is also reiterating 2012 free cash flow guidance of $1.2 billion, excluding M&A charges.
The company plans to furnish an 8-K filing in early January to provide recasted results on a quarterly basis for 2011 and the first, second and third quarters of 2012 to exclude the results of HHI.
Spectrum Brands’ acquisition of HHI also includes certain assets of Tong Lung Metal Industry Co., a Taiwanese manufacturer of residential and commercial locksets with facilities in Taiwan and the Philippines. Of the $1.4 billion cash purchase price, $100 million is being held in escrow pending the subsequent closing of the Tong Lung portion of the HHI acquisition, which is expected to occur in the first quarter of 2013.
