The European Commission, Friday approved the proposed acquisition of Power tool maker Black & Decker Corp. (BDK) by its peer The Stanley Works (SWK), clearing under the EU Merger Regulation that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.
As the merger is alleged to be combining overlapping activities with respect to hand tools, electric power tools and pneumatic tools, it was to be cleared under the EU Merger Regulation.
The Commission found that the parties involved are active in different product markets, with limited overlaps between them. While Stanley makes mostly hand and pneumatic tools, Black & Decker's strength is in electric power tools.
The market investigation showed that the products offered by the parties do not compete closely with each other and that the combined entity would continue to face several strong competitors with significant market shares.
The merger is also supported by the fact that the merged entity would not have the ability nor the incentive to close off rival manufacturers from the market through its increased product portfolio, as it will continue to face significant competition and customers retain ample sources of supply.
On November 2, 2009, both the companies have entered into a definitive merger agreement to create Stanley Black & Decker, an $8.4 billion global industrial leader in an all-stock transaction valued at about $4.5 billion. The merger was supposed to bring together two highly complementary companies with iconic brands and strong growth prospects.
As per the merger terms, Stanley shareholders would own about 50.5% of the equity of the combined company and Black & Decker shareholders would own about 49.5%.
On December 29, both the companies said that the Hart-Scott-Rodino antitrust review period for the combination of their businesses has expired, satisfying one of the customary closing conditions.
As the part of other conditions to be fulfilled, the proposed acquisition was notified to the European Commission for regulatory clearance in the European Economic Area on 5 February 2010.
BDK is currently trading at $74.56, down 0.35 or 0.47%, on a volume of 61K shares on the NYSE. SWK is currently trading at $58.38, down 0.45 or 0.76%, on a volume of 0.16 million shares on the NYSE.
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