New Britain-based Stanley Black & Decker has reached a deal worth hundreds of millions of dollars to buy the Craftsman brand from Sears and plans to expand the brand as well as sales of the products and add jobs.
A news release from Stanley Black & Decker says Stanley Black & Decker will have 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 and Sears Holdings will continue to offer Craftsman-branded products at Kmart, Sears and Sears Hometown.
The New Britain company said only around 10 percent of Craftsman-branded products are currently sold outside of Sears Holdings and the agreement will enable Stanley Black & Decker to increase Craftsman sales in untapped channels.
"Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value," Stanley Black & Decker president and CEO James M. Loree said 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.”
Loree said the company plans to expand the manufacturing footprint in the U.S., which will add jobs in the U.S.
"Hopefully it will bring some money into the city, create jobs," Eric Prims, of New Britain, said. "Craftsman makes great tools. For them to merge together, I think they'll do fine."
Sears Holdings' Chairman and Chief Executive Officer Edward S. Lampert said Sears will continue to sell Craftsman in stores and online at Kmart and Sears, and Sears Hometown.
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Stanley Black & Decker will pay Sears Holdings $525 million at closing, $250 million at end of year three and annual payments on new Stanley Black & Decker Craftsman sales through year 15 (2.5 percent through 2020, 3 percent through January 2023, and 3.5 percent thereafter).
The net present value of all these cash payments is approximately $900 million. The license granted to Sears Holdings will be royalty-free for 15 years, then 3 percent thereafter.
Stanley Black & Decker expects the sale of Craftsman branded products to contribute approximately $100 million of average annual revenue growth for approximately the next 10 years.
Craftsman tools traditionally come with a lifetime guarantee. A Stanley Black and Decker spokesman said, at this point, they're unsure if that lifetime guarantee will continue.
