Stanley Black & Decker, relatively new owner of the Craftsman tool brand – which they paid $900 million for in a complicated deal – has recently acquired Consolidated Aerospace Manufacturing LLC (CAM), for “as up to $1.5 billion.”
What is so special about CAM that Stanley Black & Decker acquired it for so much more money than Craftsman, perhaps the broadest, most well-known, and maybe even once most-popular American tool brand?
The initial acquisition news, back in January 2020, said that CAM was acquired from an investment firm Tinicum. CAM manufacturers fasteners and other components for the aerospace industry.
In their most recent investor presentation materials, Stanley Black & Decker says that:
CAM is an ideal Bolt-On to Engineered Fastening
The Bolt-On part seems unintentional, but struck me as interesting, as that’s the line of modular Craftsman 20V Max cordless power tools that Stanley Black & Decker manufactured for Sears.
Here are some bullet points from the same presentation materials:
Industry Leading Manufacturer Of Specialty Fasteners & Components
For The Aerospace & Defense End Market (~$375M LTM Revenue)
Increases Scale In High Growth, High Margin Aerospace & Defense Segment And Creates A Pathway For Profitable Growth
Purchase Price Up To $1.5B | $0.2B Contingent On The Certification & Production Levels Of 737 MAX
Adjusted For ~$185M Of Expected Cash Tax Benefits, The Net Transaction Value Is ~$1.1 – $1.3 Billion
Year 3 EPS Accretion ~$0.30 – $0.40 | Year 5 CFROI ~12%
Unfortunately, I don’t know what any of this means. Well, I know what it means, I just don’t understand the significance.
Stanley Black & Decker acquired a company, something that happens all the time, and they expect to earn money back from the investment over time.
They also expect for CAM to create a pathway for profitable growth. With the acquisition of Craftsman, I can see – and we have seen – paths to growth. When Stanley Works and Black & Decker merged, it made sense for the two very complementary tool brands to come together.
Stanley Black & Decker owns Powers Fasteners, whose products are now marketed under Dewalt Engineered by Powers branding.
What are the pathways for growth for a brand like Stanley Black Decker in the aviation fastener and component industry? Perhaps this will be an opportunity for “synergistic” efforts that includes their Proto tool brand? We shall see.