Stanley Black & Decker Inc announced on Wednesday this week that it would buy a minor stake in lawnmower maker MTD Products Inc for $234 million, expanding deeper into the outdoor garden equipment market and adding to its diverse line of products.
Reuters reported the power tool maker has been expanding its portfolio over the past two years after buying Newell Brands Inc’s tool business, Sears Holdings Corp’s Craftsman brand and a tool unit in Brazil.
The company said it would buy 20 percent of MTD and will have the option to buy the remaining 80 percent of the privately held firm beginning on July 1, 2021.
Stanley Black & Decker's President and CEO James M. Loree said in a statement, "This investment in MTD increases our presence in the $20 billion global lawn and garden market in a financially and operationally prudent way. We have always viewed outdoor products as an attractive growth category for us to expand our presence beyond handheld electric products. This transaction gives us the opportunity to do that with a world class partner. MTD has a first-rate management team, talented employees and a mission, values and commitment to innovation that are very closely aligned with our own, and we are excited to move forward with them."
MTD's Chairman and CEO Robert T. Moll said, "MTD and Stanley Black & Decker are both proven leaders in our respective industries with iconic brands and world class capabilities. We're both passionate about innovation with complementary businesses. Ultimately, this will give us more resources to bring really exciting products to our consumers."
The transaction, which is expected to close in early 2019, is subject to regulatory approvals and customary closing conditions. In connection with the transaction, Stanley Black & Decker will appoint two representatives to MTD's 11-member Board of Directors.
Beginning in 2021, should Stanley Black & Decker choose to exercise its right to acquire the remaining 80 percent stake, the companies have agreed to a valuation multiple based on MTD's expected 2018 EBITDA (earnings before interest, tax, depreciation and amortization), with a sharing arrangement for any future EBITDA growth.
Founded in 1932 in Cleveland, MTD makes brands including Cub Cadet, Troy-Bilt, Remington, Robomow, Rover and Wolf-Garten.
