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STANLEY BLACK

& DECKER
TEAM 9
SIDDHANT

SWAPNIL

SHWETANA

ARNAB

ABHISHEK

SAKETH

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%), synergy


captured will be more for Stanley.

MERGER DETAILS
Exchange of stock giving Black and Decker shareholders 21.6% premium
All of Black and Deckers stocks will be acquired
Stanley would pay $3.6 Bn in its stock valued at $45.23
Stanley Shareholders would get 50.5%, Black and Decker shareholders

would get 49.5% 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

CEO COMPENSATION
John F. Lundgren, CEO of Stanley, 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, 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

EXECUTIVE EXPENSE
Termination or change in responsibilities would trigger payments totaling to

$92.3Mn

Severance 3 years pay,


Benefits for 3 years
Income-tax gross ups

Payments under the Black and Decker long term incentive plan = $13.2Mn
Immediate vesting of unvested restricted stock, restricted stock units, and

stock options totaling $41.7Mn

Supplemental executive retirement plan (5 senior executives) total

$22.7Mn

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.

Mr. Archibald, 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.

Options on 1.0 million shares

Reports said that the foregoing of $20.5 million severance payment by


Archibald was false; he was keeping all stock and options and
converting them to Stanley Stocks and options

rtion of Synergy that may go to the CEO


John Lundgren

Stanley CEO

Nolan Archibald

Stock Benefit

49.85

Forego

Black & Decker CEO

Severance Package

20.5

Annual Bonus

5.325

Annual Equity Award

1.85

Total Forego

27.675

Benefit
Total Synergy

$350M

John Lundgren

$49.85M (14.2%)

Nolan Archibald

$70.555 (20.16%)

Total CEO

$120.405 (34.4%)

Stock

45.23

Incentive

45

Total Benefit

90.23

Cost Benefit

70.555

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

0.08
178.80

Discount Rate
0.09
0.10
0.11
170.86

Synergy
Cost to Achieve
Synergy
Other Expense
Free Cash Flow
Saving

163.22

0.12

155.87 148.79 141.97

Year 1
125

Year 2
250

Year 3
350

330

50

20

200

330

70
-275

0.13

THANK
YOU