NEW BRITAIN, Conn. — Stanley Black & Decker announced that it has agreed to acquire the remaining 80% ownership stake in MTD Holdings Inc., a privately held global manufacturer of outdoor power equipment, including Cub Cadet and Troy-Bilt, for $1.6 billion in cash. Stanley Black & Decker acquired a 20% stake in MTD in 2019.
"We have worked directly with MTD over the last three years and have been impressed with the quality of the management team, their talented employees and MTD's relentless dedication to innovation in the outdoor space," said Stanley Black & Decker's CEO James M. Loree. "The combination of businesses will create a global leader in the $25 billion and growing outdoor category, with strong brands and growth opportunities that align with two market trends driving our business – the consumer reconnection with the home and garden and electrification. We have clearly identified multiple levers to drive growth and margin expansion and are looking forward to welcoming MTD's 7,500 employees to our Stanley Black & Decker family."
READ MORE: Stanley Black & Decker acquires 20% stake in MTD
With over $2.5 billion of revenue in the last 12 months, MTD designs, manufactures and distributes lawn tractors, zero turn mowers, walk behind mowers, snow blowers, residential robotic mowers, handheld outdoor power equipment and garden tools for both residential and professional consumers under well-known brands like Cub Cadet and Troy-Bilt. MTD has manufacturing facilities in North America and Europe, and a global distribution network.
The company expects the transaction to result in cumulative annual cost synergies of approximately $100 million by 2025. The planning assumption for 2022 carries revenue of approximately $2.6 billion and consolidated adjusted EBITDA over $230 million. Using these assumptions, the acquisition is expected to be approximately $0.50 accretive to adjusted earnings per share in 2022, increasing to over $1.00 by 2025. One time charges associated with the acquisition are expected to be $175 - $200 million of integration, restructuring and other deal related costs and approximately $125 - $150 million of non-cash charges such as inventory step-up, which in the aggregate will largely be incurred upon closing and during the first three years of ownership. The total purchase price represents an adjusted LTM EBITDA multiple of approximately 8x.
"The acquisition of MTD creates a multi-year roadmap for organic revenue, profitability and cashflow growth,” said Donald Allan Jr., president and CFO. “We expect to generate significant revenue synergies as we capitalize on the two companies' collective technology investments, strong brands and global customer relationships. We have significant balance sheet flexibility supported by strong free cash flow generation to fund the MTD acquisition and to consider other capital deployment opportunities. We are excited to begin the next phase of our journey with MTD to realize these benefits, deliver high-teens return on capital, and build an innovative outdoor products leader."
The acquisition, which is subject to regulatory approvals and customary closing conditions, is expected to close in 2021 and will be funded with a combination of cash on hand and proceeds from debt incurrence, which we expect to include support by new credit facilities.
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