Stanley Black & Decker announced it has signed a definitive agreement for the sale of most of its Security assets to Securitas AB for $3.2 billion in cash. The proposed transaction includes Stanley Black & Decker's Commercial Electronic and Healthcare Security business lines ("Security").
Transaction proceeds
The businesses carry 2021 forecasted revenues of approximately $1.7 billion with an adjusted EBITDA margin in the low double-digits, implying a purchase price multiple of approximately 16 trailing adjusted EBITDA.
Net proceeds from the sale are expected to be used to fund, in part, an approximately $4 billion share repurchase which is planned to be completed in 2022. The transaction does not include Stanley Access Technologies, which is a pioneer in the industry with state-of-the-art automatic door solutions.
Portfolio management
The sale of Security is consistent with our commitment to generating substantial shareholder value"
James M. Loree, Stanley Black & Decker's CEO, stated, "The sale of Security is consistent with our commitment to generating substantial shareholder value and allows us to sharpen our strategic focus on growing our core businesses while also returning capital to investors through a significant share buyback. This transaction is a result of our active approach to portfolio management, and the attractive valuation we received reflects the investments we made in transforming our Security business over the last several years.”
“The business is well-positioned for ongoing growth within Securitas, a global pioneer in the security industry. On behalf of the entire Stanley Black & Decker organisation, I want to thank our Security team members for their valuable contributions over the years."
Creating opportunities
Magnus Ahlqvist, Securitas AB President & CEO, said, "We are incredibly excited to join forces with Stanley Security and are confident that we will form a winning team.”
“Together, we will be perfectly placed to deliver outstanding expertise and potential for innovation which will create extraordinary opportunities not only for our shareholders but for our colleagues and our hundreds of thousands of customers around the world."
Digital transformation platform
The new combination with Securitas will provide them the best platform for the next stage of success"
Donald Allan, Jr., Stanley Black & Decker's President & Chief Financial Officer commented, "Three years ago we initiated a digital transformation in Security with investments in people, new partnerships and innovative commercial solutions to establish these businesses as leaders with a strong growth trajectory in their respective markets.”
“The team has made incredible progress and the new combination with Securitas will provide them the best platform for the next stage of success. I want to personally thank my colleagues from Stanley Security for the outstanding amount of energy and passion they put into this transformation to make this phase a success.”
Value maximisation
"Our use of approaching $3 billion of net proceeds towards a planned $4 billion share repurchase program that we expect to complete in 2022 is consistent with our long-term capital allocation strategy focused on value maximisation.”
“Overall, this transaction will allow us to simultaneously strengthen Stanley Black & Decker's core market position while returning significant value to our shareholders."
Transaction approval
The transaction has been approved by the Boards of Directors of Stanley Black & Decker and Securitas and is expected to close in the first half of 2022, but timing is contingent upon receiving regulatory approvals and other customary closing conditions.
The approximately $4 billion share repurchase program is expected to commence in 2022 with $2.0 - $2.5 billion expected to occur in the first quarter and the remainder the Company expects to complete in the summer of 2022. The Company's capital allocation strategy reflects its commitment to substantial capital return, strong investment-grade credit ratings, and opportunistic strategic value-creating M&A.
The Company is reaffirming its full-year 2021 EPS guidance of $9.70 - $10.05 on a GAAP basis and $10.70 - $10.90 on a non-GAAP adjusted basis.