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STANLEY BLACK

& DECKER
TEAM 9
SIDDHANT

SWAPNIL

SHWETANA

ARNAB

ABHISHEK

SAKETH

synergy captured will be more for Stanley. .HOW THE VALUE OF SYNERGIES (IF ANY) WILL BE SHARED IN THE PROPOSED TRANSACTION BETWEEN SHAREHOLDERS OF THE TWO COMPANIES? Since premium is high (21.6%).

5% of the combined enterprise  Resultant cost saving was a major motivation factor – expected $350Mn annually over 3 years  One time restructuring cost of $400 Mn  EPS expected to increase $1 per share versus without the merger .6% premium  All of Black and Decker’s stocks will be acquired  Stanley would pay $3.6 Bn in its stock valued at $45.MERGER DETAILS  Exchange of stock giving Black and Decker shareholders 21.23  Stanley Shareholders would get 50.5%. Black and Decker shareholders would get 49.

CEO of Black and Decker. would become the executive chairman  One time grant of stock options on 1Mn shares of the combined company  Incentive payment of  $15Mn for achieving annual saving of $225Mn  $30Mn for achieving annual saving of $300Mn  $45Mn for achieving annual saving of $350Mn  Foregone $20.5Mn severance payment . CEO of Stanley.CEO COMPENSATION  John F. would become the CEO of the combined enterprise  Grant of restricted stock units. equal in value of an option to purchase 1.1Mn shares of Stanley common stock  Continuation of normal compensation contract  Nolan Archibald. Lundgren.

3Mn  Severance – 3 years pay.7Mn  Supplemental executive retirement plan (5 senior executives) total $22. restricted stock units. and stock options totaling $41.  Benefits – for 3 years  Income-tax gross ups  Payments under the Black and Decker long term incentive plan = $13.EXECUTIVE EXPENSE  Termination or change in responsibilities would trigger payments totaling to $92.7Mn .2Mn  Immediate vesting of unvested restricted stock.

  • Options on 1. • Mr. he was keeping all stock and options and converting them to Stanley Stocks and options .CORPORATE GOVERNANCE ISSUE • There is a growing trend in acquisitions for the buyer to offer large monetary incentives to management of the seller to “influence” a favorable outcome.5 million severance payment by Archibald was false.0 million shares • Reports said that the foregoing of $20. CEO of B&D had $10 million per year pay package • Cost synergy bonus of up to $45 million for cutting costs and eliminating jobs in the new combined company. Archibald.

555 (20.23 Cost Benefit 70.85 Forego Black & Decker CEO Severance Package 20.4%) Stock 45.85M (14.23 Incentive 45 Total Benefit 90.85 Total Forego 27.16%) Total CEO $120.2%) Nolan Archibald $70.405 (34.555 .675 Benefit Total Synergy $350M John Lundgren $49.325 Annual Equity Award 1.5 Annual Bonus 5.rtion of Synergy that may go to the CEO John Lundgren Stanley CEO Nolan Archibald Stock Benefit 49.

97 Year 1 125 Year 2 250 Year 3 350 330 50 20 200 330 70 -275 0.11 170.09 0.08 178.12 155.80 Discount Rate 0.As a shareholder of Stanley would you vote in favor of this transaction? Would you vote in favor of the compensation arrangements? Why?  Yes NPV 0.22 0.87 148.13 .79 141.86 Synergy Cost to Achieve Synergy Other Expense Free Cash Flow Saving 163.10 0.

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