NEW YORK — Sears is selling its well-known Craftsman brand to New Britain-based Stanley Black & Decker Inc., which plans to grow the tool brand by selling its products at more stores.
Currently, only 10 percent of Craftsman products are sold outside of Sears-owned department stores. Sears will continue to sell Craftsman products at its stores, including Kmart and Sears Hometown.
Stanley will pay about $900 million for Craftsman, which includes $525 million when the deal closes this year, $250 million after three years and a percentage of sales for 15 years. After 15 years, Sears will start paying Stanley 3 percent of the Craftsman sales it makes.
Shares of Hoffman Estates, Illinois-based Sears Holdings Corp shares rose 7.5 percent to $11.14 before the stock market open Thursday.
“Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” said Stanley Black & Decker President and CEO James M. Loree in a statement. “This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels. We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online. To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S. This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years. 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. This transaction, which aligns squarely with this strategy, also reflects an effective allocation of capital particularly when viewed in the context of the recently announced Mechanical Security sale. We’ve essentially freed up capital trapped in a low-growth business to invest in organic growth and EPS accretion.”
