• by Thom Forbes  @tforbes, January 6, 2017

Sears Holdings’ spiraling losses, as Sarah Mahoney details below, have turned out to be Stanley Black & Decker’s gain. Over time, Stanley will pay Sears about $900 million for the Craftsman line, which Sears has controlled since it bought the trademark for $500 in 1927 and “quickly touted it as superior to the Fulton and Trojan tool lines,” as a timeline states. 

“Stanley Black & Decker may do for Craftsman what Sears couldn’t — get the tools into customers’ hands,” observes Lisa Fickenscher in the New York Post. “Stanley plans to make the iconic … brand, revered by mechanics, carpenters, plumbers and home repair geeks, more widely available outside of Sears and Kmart stores: Enter Home Depot and Lowe’s.”

Only 10% of Craftsman products are sold in other stores at present, primarily Ace Hardware. 

“Craftsman is a legendary, American brand with tremendous consumer awareness built on a legacy of producing quality products at a great value,” Stanley president and CEO James M. Loree said in a statement that foresees increased sales through not only the big boxes but also other “underpenetrated channels … including retail, industrial, mobile and online.” 

Loree also “promised to ‘re-Americanize’ the brand by adding jobs in the United States as it shifts Craftsman manufacturing to its own plants stateside,” Alexander Soule writes for the [Norwalk, Conn.] Hour. 

The company, which is based in New Britain, Conn., “has added 800 employees the past three years at its 11 U.S. manufacturing plants to give it about 3,000 factory workers in all,” Soule reports, and it intends to open a new $35 million facility at an undisclosed location in the future.

“While the extra capacity should help get a once-iconic $2 billion a year line back on its feet, the move also potentially offers Stanley Black & Decker another benefit: shielding it from a potential surge in economic nationalism under President-elect Donald Trump,” writes Phil Wahba for Fortune. 

“Though … Loree did not mention Trump by name in his comments to Wall Street analysts and investors on Thursday morning, it was clear that the incoming president's threats to levy a border tax on U.S. companies that manufacture items abroad that they intend to sell to the U.S. market were a consideration,” Wahba continues.

“It’s going to be advisable to have more manufacturing in the U.S,” Loree said. “The CEO also touted the deal as ‘socially responsible’ and touted the environmental benefits of not having to ship items to the U.S. as well as the reduced foreign exchange risk,” Wahba reports.

Slides from the presentation are posted here.

“Stanley Black & Decker was one of several dozens of companies approached during the summer about bidding on the tool business. But after the company and its bankers at Deutsche Bank spent time devising a potential takeover bid, Stanley Black & Decker turned its eyes toward buying Newell Brands’ tool business, a deal announced in October,” Michael J. de la Merced reports for the New York Times. “By late fall, however, Sears returned to ask if Stanley Black & Decker would reconsider a bid for Craftsman.”

The $900 million value placed on the deal consists of a $525 million cash payment at closing, $250 million at end of year three, and annual payments to Sears Holdings of between 2.5% and 3.5% on new Stanley Black & Decker sales of Craftsman products through year 15, according the news release.

During a conference call yesterday, Loree “acknowledged the risks” of the deal, “particularly since 90% of Craftsman’s sales come from Sears-related stores. He said the company structured the deal to minimize its risks by assuming no contractual Sears credit risk and no obligation to supply Sears beyond current levels,” Suzanne Kapner writes for the Wall Street Journal.

“It's important for our members to know that we will continue to sell Craftsman in-store and online at Kmart and Sears, and Sears Hometown,” Sears Holdings' chairman and CEO Edward S. Lampert said, Patricia Daddona reports for the Hartford Business Journal.

“The sale is truly the end of an era, as both Sears and Craftsman have been associated with American manufacturing and craftsmanship for almost a century. The tool brand and the store that sells it are practically synonymous,” eulogizes Jay Bennett for Popular Mechanics.

But the latter may undergo a resurgence under its new ownership  — kind of like the Hostess Twinkie, which similarly was jettisoned by a failing parent company but has undergone a very different kind of revival in short order.