The latest in a recent flurry of moves to raise cash, Sears Holding announced Thursday that it will sell its well-known Craftsman tools brand to Stanley Black and Decker. The value of the deal could top $1 billion.
Stanley will pay $525 million up front – the deal is expected to close later this year – and another $250 million at the end of year three. Stanley will also pay Sears a percentage of its new sales of Craftsman products for 15 years, and Sears will continue to sell Craftsman-branded products through a perpetual license deal, which will be royalty-free for the first 15 years, and royalty-bearing after that.
“This agreement represents a significant opportunity to grow the market by increasing the availability of Craftsman products to consumers in previously underpenetrated channels,” said Stanley President and CEO. “We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online.”
Sears, once an icon of American retail, has reported declining sales for years. In addition to the Craftsman deal they also announced plans to close 150 more of their struggling Kmart and flagship Sears stores.
Sears CEO Eddie Lampert said that Sears “will continue to take actions to adjust our capital structure, meet our financial obligations and manage our business to better position Sears Holdings to create long-term value.”
Sources: CNN, Chicago Tribune, HBS Dealer