Stanley Black & Decker CFO Hints at Sale of Aerospace Unit
The leaders of Stanley Black & Decker Inc. are looking to sell parts of their business that would fetch between $500 million and $1 billion as they aim to lower the holding company’s debt ratios. Speaking to a conference Nov. 12, CFO Pat Hallinan said the most likely candidate to be divested is Stanley Black & Decker’s aerospace fasteners group.
Addressing the Baird Global Industrial Conference being held this week in Chicago, Hallinan said the team led by President and CEO Don Allan is looking to lower Stanley Black & Decker’s ratio of debt to earnings before interest, taxes and depreciation to about 2.5 times from its roughly 3 today. “That probably means divesting one asset of size,” he added, and be more likely to come from the company’s industrials group rather than its tools businesses, into which executives have been investing more this year.
Stanley Black & Decker’s industrials portfolio brings in about $2 billion in sales annually and supplies parts for customers in the automotive, aerospace and general industrial markets as well as some tools to insert those fasteners, which Hallinan told Baird analyst Tim Wojs is “a bit of a razor-razor blade model.” The auto sector accounts for roughly $1 billion of revenues each year while aerospace customers spend about $300 million annually with Stanley Black & Decker—and thus be a good candidate for divestiture.
“You’re a small aerospace business in a world of giants,” Hallinan said. “Is that the one that maybe you either have to get a lot bigger or maybe it will be more valuable to somebody else other than you?”