Sears Holdings Corp. agreed to sell its Craftsman line to Stanley Black & Decker Inc. for about $900 million in a deal that broadens sales of the tool brand beyond the retail chain.
Stanley will pay $525 million at closing, $250 million after three years, and make annual payments on new Craftsman sales for 15 years, the companies said in a statement Thursday. Sears will continue to sell Craftsman products at its stores. The license to Hoffman Estates, Illinois-based Sears will be royalty-free for 15 years, and then generate 3 percent afterward.
Only about 10 percent of Craftsman-branded products are sold outside Sears today and the agreement allows Stanley to significantly increase Craftsman sales in these untapped channels, New Britain, Connecticut-based Stanley said.
"To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S.," Stanley Chief Executive Officer James M. Loree said in the statement. "This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years." The deal comes about three months after Stanley agreed to buy Newell Brands Inc.'s tools business for $1.95 billion.
Sears shares rose 3.5 percent to $10.72 at 7:54 a.m. in New York premarket trading. Stanley was little changed.
"We will continue to take actions to adjust our capital structure, meet our financial obligations and manage our business to better position Sears Holdings to create long-term value by focusing on our best members, our best stores and our best categories," Sears CEO Edward S. Lampert said in the statement.
(c) 2017, Bloomberg · Richard Clough