In what seems like a smart deal for both security industry giants, Stanley Black & Decker has reached an agreement with Dormakaba Holding AG to sell most of its mechanical security devices business to the Swiss company for $725 million in cash. Stanley Black & Decker will be sending Dormakaba its BEST Access, phi Precision, and GMT commercial hardware brands. It will hang onto the Sargent and Greenleaf business.
The sale fits into the strategic business plans of each company as Dormakaba seeks to increase its security foothold in North America and build its brand strength, while Stanley Black & Decker looks for additional investment capital to explore future technology acquisitions. Stanley CEO James M. Loree said that the sale of the commercial hardware group will allow the company to deploy capital in a more accretive and growth-oriented manner.
“With this transaction and our decision to retain the electronic security and automatic doors businesses, we have concluded our previously announced Security portfolio assessment," Loree continued, "The commercial electronic security business, with its inherent linkage to the digital world provides both a stable recurring revenue stream and an opportunity to develop and market high value, high growth customer solutions incorporating IoT, cloud, advanced analytics and other emerging technologies. Our scale and global footprint in this business is an excellent platform to build upon, both organically and inorganically. Our automatic doors business also represents an attractive growth opportunity for market expansion through both core and breakthrough innovation. We remain focused on applying the principles of our proven operating system, SFS 2.0, to enhance the growth, profitability and asset efficiency of these businesses."
According to Bloomberg, Loree is refocusing Stanley on growth opportunities in the tool industry after ending a self-imposed deal-making hiatus with the $1.95 billion acquisition of Newell Brands Inc.’s tools business in October. Dormakaba said the acquisition will provide it with the scale to be one of the top three security firms in North America.
With its acquisition of Stanley Commercial Hardware’s three main brands, this includes the iconic BEST brand; Dormakaba will now have a portfolio that includes a broad range of mechanical products and security solutions as well as wireless and cloud-based electronic locks installed in more than 350,000 facilities across North America. This is an attractive and stable repeat business model.
In a Dormakaba teleconference hosted today by CEO Riet Cadonau and CFO Bernd Brinker, the two stressed several advantages to the company this transaction provides, including:
• It builds on the successful Dormakaba merger and recent Mesker acquisition, which added substantial scale in North America
• A large installed base that provides an attractive and stable repeat business, including the possibility for future upgrades to electronic and wireless locks
• The fact that BEST is one of the most recognized brands in the market, which will considerably strengthen their market position
• It possesses established spec-writing capabilities that can open access to new construction projects, and provides opportunity to exploit interesting cross-selling opportunities in the future
• It has a strong position in growing verticals such as education and healthcare that are complementary to Dormakaba’s established position in hospitality, multi-housing, and government sectors
“This transaction builds on the Dormakaba merger, which boosted our global market position, and the recently completed Mesker acquisition, which will expand our North America offering to cover all essential door components including manual doors. Now with this unique strategic opportunity to acquire Stanley Commercial Hardware, we will add substantial scale, becoming a top-three provider in the attractive North American market that can offer the full portfolio of door hardware and access control solutions to our customers,” Dormakaba CEO Riet Cadonau said.
The acquisition will provide selected portfolio improvements such as master key systems and hinges as well as ANSI-certified products manufactured in Stanley’s Taiwan production facility, which is part of the acquisition. With more product breadth and additional channel relationships with geographically-based contract hardware distributors and wholesalers, Dormakaba will be able to exploit its new unique portfolio.
“Thanks to Stanley Commercial Hardware’s large installed base and spec writing capabilities, we will also be able to exploit interesting cross-selling opportunities in the future. With the North American market still relying on mechanical solutions, Dormakaba will be in an excellent position to meet evolving customer demands for electronic upgrades and cloud-based solutions including mobile credential technology,” said Michael Kincaid, COO, Access Solutions Americas, Dormakaba.
China-based GMT, which is also included in the acquisition, employs around 600 staff. It is an established provider of commercial hardware products primarily for the mid- and lower price point markets. GMT is a well-known brand for glass door floor hinges and door hardware in China.
