Illinois-based Sears has agree to see the 89-year-old brand to Stanley Black & Decker for $525 million in cash and an additional $250 million by the end of the third year after the sale. In addition, there will be payments for up to 15 years as a variable percentage of sales. The approximate total value of the deal is $900 million, according to Sears.
The deal will allow the Connecticut-based Stanley Black & Decker the right to produce and sell Craftsman-branded tools in non-Sears stores in the US and internationally. Sears will also be able to sell Craftsman in its own stores through a perpetual license issued by Stanley Black & Decker. Stanley Black & Decker will receive royalties from Sears after a 15-year grace period.
“We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online,” said Stanley Black & Decker CEO James Loree. “To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S. This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years.”
The deal stipulates that Sears will receive annual payments from new sales from Stanley Black & Decker Craftsman during a 15-year period. Between now and 2020 Sears will get 2.5 percent of sales; from 2020 until 2023 3.0 percent; and for the remaining time, 3.5 percent.