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Thursday, June 30, 2022

Stanley Black & Decker [NYSE: SWK] Agrees to Buy Remaining Stake in MTD

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Stanley Black & Decker, Inc. [NYSE: SWK] disclosed that it has decided to buy the remaining 80% ownership holdings in MTD Holdings Inc. (MTD). SWK will pay $1.6 billion in cash for the ownership of the remaining stakes of MTD.  Stanley Black & Decker purchased 20 percent holdings in MTD in 2019.

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SWK revealed that the quality of the management team, brilliant employees, and MTD’s unrelenting commitment to modernization in the outdoor space has impressed the firm which encouraged SWK to buy the remaining holdings in the firm. The merger of businesses will build a global leader in the $25 billion and expanding the outdoor category.

Furthermore, collecting more than $2.5 billion of revenue in the last twelve months, MTD designs produces and dispatches lawn tractors, zero-turn mowers, etc for both housing and professional buyers. MTD did this under brands like Cub Cadet and Troy-Bilt. MTD also owns modern production facilities in North America and Europe and a worldwide distribution network.

Financial Benefits

Additionally, the firm anticipates that the transaction will lead to an aggregate yearly cost synergy of nearly $100 million by 2025. Its planning hypothesis for 2022 carries revenue of roughly $2.6 billion and combined adjusted EBITDA over $230 million. Using these expectations, the purchase is expected to be roughly $0.50 incremental to adjusted earnings per share in 2022. Hence, it will grow more than $1.00 by 2025.

Additionally, the purchase, which is dependent on regulatory authorization and customary closing conditions, is anticipated to execute in 2021. It will be financed with a combination of cash on hand and the profits from the debt incurrence. Moreover, the firm envisages including backing by new credit facilities.

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