Stanley Black & Decker is buying Sears’ iconic Craftsman tool brand in a deal valued at about $900 million.
With the acquisition, which the manufacturer announced Thursday, Stanley will own the rights to develop, make and sell Craftsman products. The deal is expected to close this year.
Sears stores sell most Craftsman products. However, Stanley will be selling the tools more broadly, as well as through Sears-owned outlets, according to Stanley. Stanley will also expand its manufacturing operations in the U.S. to accommodate growth.
“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” says James M. Loree, Stanley president and CEO. “We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online.”
Sears Holdings was working to secure a buyer for Craftsman in an effort to stop the company’s steady financial decline. Sears also announced Thursday that it would be closing an additional 150 unprofitable stores. In order to give the company an”asset-light business model,” Sears made this decision to close stores help cut losses.
In 2016, Stanley had been linked to a potential Craftsman acquisition. Instead, the company purchased Newell Brands’ tool business in October. That acquisition was Stanley’s first since 2013.
“We are pleased to reach this agreement after determining that externalizing the Craftsman brand would accomplish our goals of driving value for Sears Holdings and positioning Craftsman for future growth,” Edward Lampert, Sears chairman and CEO, says in a statement.
“Craftsman has a storied history as an iconic American brand and in Stanley Black & Decker, we have found a great owner that is committed to expanding Craftsman and helping it to reach its potential outside of its current channels.”
As part of the deal with Stanley, Sears and Sears-owned Kmart stores will continue selling the brand. Existing sales of Craftsman products outside of Sears stores were approximately $200 million over the past year, according to Stanley.
The sale of Craftsman branded products is expected to contribute approximately $100 million of average annual revenue growth for the next 10 years, according to the company.
“Craftsman is a legendary American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” Loree says.
In December, Stanley Black & Decker entered into an agreement to sell most of its commercial mechanical security business. That sale and the Craftsman acquisition reflect Stanley’s current growth plans.
“As we continue our growth trajectory as a diversified industrial company, we continue to look at opportunities to build upon our world-class portfolio of franchises and brands to create shareholder value,” Loree says.
Selling the security business and buying Craftsman are part of that strategy. This is because Stanley has “essentially freed up capital trapped in a low-growth business to invest in organic growth,” he says.