What will the sale of Craftsman mean for Sears and Stanley Black & Decker?
Only about 10 percent of Craftsman products are currently sold outside of stores and websites affiliated with Sears Holdings, but that is about to change now that the cash-strapped parent of Sears and Kmart is selling the tool brand to Stanley Black & Decker.
“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” said James Loree, president and CEO of Stanley Black & Decker. “We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online.”
When the deal, which was approved by the boards of both companies, closes at some point this year, Stanley Black & Decker will get the rights to develop and manufacture products under the Craftsman name to be sold outside of businesses affiliated with Sears Holdings.
Sears will continue to source Craftsman products through its existing suppliers to sell in its stores as part of a perpetual license with Stanley Black & Decker that will be royalty free for 15 years.
Sears is to be paid $525 million when the deal closes. The retailer will receive another $250 million at the end of the third year and annual percentages of sales after that.
“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,” said Edward Lampert, chairman and CEO of Sears Holdings, in a statement. “This transaction represents a significant step in our ongoing transformation to a membership focused business model.”
Mr. Lampert, who has recently made the news after his ESL Investments offered a loan of $500 million to Sears Holdings, added, “Looking ahead, 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.”
- Stanley Black & Decker Reaches Agreement To Purchase Craftsman Brand From Sears Holdings – Stanley Black & Decker/Sears Holdings Corporation
- Lampert’s latest bid to prop up Sears: Sell Craftsman – Bloomberg/Crain’s Chicago Business
- Sears CEO lends retailer another $500M amid ongoing losses – New York Post
DISCUSSION QUESTIONS: What will sale of Craftsman mean for Sears Holdings? What will it mean for Stanley Black & Decker? Did one company get the better end of the bargain?