Stanley Secures MTD Acquisition

Stanley Secures MTD Acquisition

Stanley – August 18, 2021

Stanley Black & Decker revealed its definitive agreement to purchase the remaining 80 percent ownership interest in MTD Holdings Inc. (“MTD”), encompassing the well-known Cub Cadet and Troy-Bilt brands, for a sum of $1.6 billion in cash. Stanley presently holds ownership of the Craftsman brand. A prior investment saw Stanley Black & Decker acquire a 20 percent stake in MTD back in 2019.

“Over the past three years, we’ve collaborated closely with MTD and have been consistently impressed by the caliber of their leadership, the dedication of their workforce, and MTD’s unwavering commitment to innovation within the outdoor solutions sector,” stated James M. Loree, CEO of Stanley Black & Decker. “This combination will establish a dominant global player in the $25 billion and expanding outdoor market, leveraging powerful brands and growth prospects aligned with key trends – a renewed focus on the home and garden, and the shift towards electrification. We’ve identified multiple avenues for growth and margin improvement and eagerly anticipate welcoming MTD’s 7,500 employees into the Stanley Black & Decker family.”

Robert T. Moll, Chairman, CEO, and President of MTD, commented, “My grandfather founded MTD nearly nine decades ago, and I am immensely proud of our heritage as I look forward to our future alongside Stanley Black & Decker. Both companies are recognized leaders in their respective industries, boasting iconic brands, world-class capabilities, and a passion for delivering groundbreaking products to our customers. I am confident we are joining forces with an organization that will continue to uphold our commitment to inspiring a love for the outdoors.”

With revenue exceeding $2.5 billion over the last twelve months, MTD designs, manufactures, and distributes a comprehensive range of outdoor power equipment, including lawn tractors, zero-turn mowers, walk-behind mowers, snow blowers, robotic mowers, handheld tools, and garden implements for both residential and professional users. These products are marketed under established brands like Cub Cadet and Troy-Bilt. MTD operates state-of-the-art manufacturing facilities in North America and Europe, supported by a robust global distribution network.

Together, Stanley Black & Decker and MTD are poised to introduce a pipeline of innovative products for both professional and residential outdoor equipment customers. MTD has demonstrated substantial progress in enhancing its EBITDA margin, rising from 4.5% in 2018 to the high single digits in the most recent twelve-month period, with further improvement projected to the mid-teens over the next four years as cost and revenue synergies are realized.

The Company anticipates approximately $100 million in cumulative annual cost synergies by 2025 as a result of this transaction. Current projections for 2022 estimate revenue of around $2.6 billion and consolidated adjusted EBITDA exceeding $230 million. Based on these assumptions, the acquisition is expected to contribute approximately $0.50 to adjusted earnings per share in 2022, increasing to over $1.00 by 2025. One-time charges related to the acquisition are estimated at $175 - $200 million for integration, restructuring, and other deal-related costs, and approximately $125 - $150 million in non-cash charges such as inventory valuation adjustments, largely incurred upon closing and within the first three years of ownership. The total purchase price represents an adjusted LTM EBITDA multiple of approximately 8x.

Donald Allan Jr., President and CFO, added, “The acquisition of MTD establishes a multi-year roadmap for organic revenue growth, improved profitability, and strong cash flow generation. We expect significant revenue synergies by leveraging the combined technology investments, brand strength, and global customer relationships of both companies. We possess considerable financial flexibility, supported by robust free cash flow, to fund the MTD acquisition and evaluate other capital deployment opportunities. We are excited to embark on this next phase with MTD, realizing these benefits, delivering high-teens return on capital, and building a leader in innovative outdoor products.”

The acquisition, contingent upon regulatory approvals and customary closing conditions, is projected to finalize in 2021 and will be financed through a combination of existing cash reserves and proceeds from debt issuance, which is expected to include support from new credit facilities.