Stanley Black & Decker Buys Craftsman Brand

Stanley Black & Decker has entered into a definitive agreement to purchase the Craftsman brand from Sears Holdings for a reported $900 million.

The transaction provides Stanley Black & Decker with the rights to develop, manufacture and sell Craftsman-branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries.  

As part of the deal, Sears will continue to offer Craftsman products sourced from existing suppliers through its current retail channels through a perpetual license from Stanley Black & Decker; the license will be royalty-free for the first 15 years after the deal closes and royalty-bearing thereafter.

Approximately 10% of Craftsman products are currently sold outside of Sears' own channels, despite the retailer's efforts in recent years to expand availability through outside retailers such as Ace Hardware and Costco. The deal should let Stanley Black & Decker significantly increase Craftsman sales through a variety of outlets.

"Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value," says Stanley Black & Decker President and CEO James Loree. "This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously under-penetrated 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.," Loree continues. "This will add jobs in the U.S., where we have increased our manufacturing headcount by 40% in the past three years.”

Selling off its iconic Craftsman brand was just one of the steps Sears Holdings is taking to keep the company solvent. It also announced this month that it will close 42 Sears stores and 108 Kmart locations by the end of March. According to reports, Sears Holdings needs to raise $1.5 billion to keep operating through the end of 2017. It will receive $525 million in cash from Stanley Black & Decker when the Craftsman deal closes, with the rest of the $900 million total coming through future payments.

Chairman and Chief Executive Officer Edward Lampert positioned the sale as a way to help his company "accomplish our goals of driving value for Sears Holdings and positioning Craftsman for future growth. ... Looking ahead, we will continue to take actions to adjust our capital structure, meet our financial obligations and manage our business better."

Stanley Black & Decker ranks 50th on CGT's list of Top 100 Consumer Goods Companies for 2016.