Craftsman sold to Stanley B&D for $900 million

[godwin]

With Sears circling around the toilet bowl.. and cheap imports attacking the low end + people just don't tool much anymore.. Craftsman is sold to Stanley which basically makes 60% + of the tool market?

If the Donald can make tool company makes tool in the US and sell them for $500 a set.. who in the heck still buys them? I mean there aren't that many stuff left to fix.. eg the GM Bolt has little maintenance needs. Basically wiper fluids.

https://www.bloomberg.com/news/artic...ut-900-million

Spoiler!

Photographer: STILLFX/Getty Images/iStockphoto
Sears to Sell Craftsman for $900 Million as Lampert Seeks Cash
by Rick Clough
January 5, 2017, 4:44 AM PST January 5, 2017, 5:56 AM PST

Sears Holdings Corp. agreed to sell its Craftsman tool brand to Stanley Black & Decker Inc. for about $900 million, marking Chief Executive Officer Edward Lampert’s third move in the last two weeks to prop up the beleaguered retailer with fresh sources of funding.

Under terms of the deal, Stanley will pay $525 million at closing and $250 million after three years, the companies said in a statement Thursday. The buyer also will make annual payments on new Craftsman sales for 15 years.

With Sears’s department-store business continuing to bleed cash, Lampert has turned to selling and spinning off assets to keep the company operating. The hedge fund manager, who’s also the retailer’s chairman and largest investor, agreed earlier this week to lend the company $500 million and said last month that affiliates of his firm would offer it a $200 million line of credit. Sears also has been reviewing its DieHard batteries and Kenmore appliance brand for potential sales.

“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,” Lampert said in Thursday’s statement.

Investors cheered the move, sending Sears shares up 8.6 percent to $11.25 at 8:25 a.m. in early trading in New York. The Hoffman Estates, Illinois-based company had slumped 55 percent last year as the company continued to post losses. New Britain, Connecticut-based Stanley advanced 2.5 percent to $119.44.
Iconic Brand

Craftsman has been part of Sears since 1927, when the retailer acquired the brand for $500. The tools debuted in the iconic Sears catalog two years later. By the 1940s, the brand benefited from a surge in power-tool sales. In 1981, President Jimmy Carter was given a Craftsmen woodworking set as his farewell gift when he left the White House.

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Craftsman was eventually offered through other retailers, including Costco Wholesale Corp. and Ace Hardware, but Sears’s decline has taken a toll on the brand. Only about 10 percent of Craftsman-branded products are currently sold outside of Sears, and the agreement allows Stanley to increase Craftsman sales in these untapped channels. Sears will continue to carry Craftsman products at its stores. The license will be royalty-free for 15 years, and then generate 3 percent afterward.

“To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S.,” Stanley CEO James M. Loree said in the statement. “This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years.”

The pledge to support U.S. manufacturing comes at a time when President-elect Donald Trump has criticized companies for shifting jobs overseas. Ford Motor Co. canceled a $1.6 billion Mexican expansion earlier this week, saying it would add positions in Michigan instead.

The Craftsman deal comes about three months after Stanley agreed to buy Newell Brands Inc.’s tools business for $1.95 billion.
Generating Cash

For Sears, the sale is the latest in a long string of moves designed to generate cash for the ailing retail business. The company raised $2.5 billion in 2015 by forming a real estate investment trust that bought more than 250 of its properties.

And more property sales may be coming. This week’s $500 million loan was secured by the company’s real estate in anticipation that a future sale of some properties could help pay back the debt.

Lampert also previously spun off the Sears Hometown & Outlet business and Lands’ End clothing line.

Still, challenges remain. The company needs to raise a total of roughly $1.5 billion to make it through 2017 comfortably, Christina Boni, an analyst at Moody’s Investors Service, has estimated.

[fliptuner]

When I was growing up, Craftsman had the best quality hand tools for the hobbyist and the best exchange policy. It's a shame to see Sears go downhill (in Canada at least).

[320icar]

eg the GM Bolt has little maintenance needs. Basically wiper fluids.

So... These cars don't have brakes? Suspension components? Doors, hinges, bushings, steering racks, control arms, sway bars etc etc. Just because you make a vehicle electric, doesn't mean it's held on by Velcro and duct tape.

I understand what you're saying, but I blame the shift in social standards over technological advancements (throwing stuff away and consuming more vs buying high quality and fixing it when it breaks)

[!Aznboi128]

Originally Posted by fliptuner

When I was growing up, Craftsman had the best quality hand tools for the hobbyist and the best exchange policy. It's a shame to see Sears go downhill (in Canada at least).

Totally agree, most of my tools are from craftsman cause I simply can't afford Snap-on but they still offer amazing quality

[underscore]

Originally Posted by 320icar

I understand what you're saying, but I blame the shift in social standards over technological advancements (throwing stuff away and consuming more vs buying high quality and fixing it when it breaks)

Technological advancements have made it a lot harder to repair things, especially at a DIY level.

[godwin]

Actually Bolt has regenerative brakes (so basically a stator that generates electricity when braking just like the Volt 2.0 has)

So fluids (coolant + brake) and tires.. You do realise that's the reason why every major car manufacturer is jumping into the "connected" concept right? As the maintenance line item becomes insignificant.. they have to hook in the consumer some how.



Here is the maintence article:

The Chevy Bolt EV requires ZERO maintenance | Electric Vehicle News

Originally Posted by 320icar

So... These cars don't have brakes? Suspension components? Doors, hinges, bushings, steering racks, control arms, sway bars etc etc. Just because you make a vehicle electric, doesn't mean it's held on by Velcro and duct tape.

I understand what you're saying, but I blame the shift in social standards over technological advancements (throwing stuff away and consuming more vs buying high quality and fixing it when it breaks)

[godwin]

I had to order a bearing for my Craftsman jointer.. they no longer do it at local stores, you have to call into Edmonton call center and they will order it for you.

Sears in the US is just as bad as Sears in Canada.. Also take a look at Macys!

Originally Posted by fliptuner

When I was growing up, Craftsman had the best quality hand tools for the hobbyist and the best exchange policy. It's a shame to see Sears go downhill (in Canada at least).

[Marshall Placid]

The underlying core business of "department store" is an outgoing business.

With Sears, selling its core brands and assets is a bad move.

Craftsman is one of these brands.

I do understand the need to generate capital.

However, there is no point in prolonging the eventual slow and agonizing death of Sears.

I have a feeling that the sale is to repay Eddie's loan and to pay back other loans or to pay a special dividend to the hedge fund.

For example, Eddie made the $500 million loan at (quite possibly) an attractive interest rate.

Lo and behold, a few months (or so) later, Eddie sells Craftsman.

There you go.

A few months' worth of interest at $500 million x 2% (for the few months) = $10 million just like that waiting for 2 months.

Hedge funds (and Eddie's hedge fund company) are known to buy troubled assets, strip them of valuable assets (in Sear's case, real estate and now, the brands) to "repay" the hedge funds. In the end, once the company is completely stripped, the returns are well over 100% for the hedge fund.

What I find confusing is why Eddie is doing this ever so slowly.

From teh best of my knowledge (without googling), Eddie bought Sears (through the hedge fund and other leveraged instruments) at least several years ago.

I am assuming the hedge fund had the best intentions of actually trying to grow or save Sears.

However, the last few years were trying, so I am now positing that Eddie is liquidating Sears to recoup and dare I say, earn a return on the hedge fund's (and Eddie's) investments.

We should know very soon, depending on other moves Eddie makes in the future (including selling Kenmore and Diehard and more... real estate).

[tiger_handheld]

Lampart and Sears is like Richard Greer in Pretty woman

buy it - break it apart to pieces and sell it

untill you meet a hooker that says - why don't you ever build anything.

Lampart needs to meet his Julia Roberts.

[SSM_DC5]

Lifetime warranty going to be not so lifetime anymore?