On June 11th the Robert Bosch Tool Corporation announced that it has entered into an agreement to acquire CST/Berger from Stanley Works. The purchase price amounts to $205 Million for the tool division that had $80 million in sales for 2007 (excluding $10 million in certain European sales). The CST/Berger is primarily focused on laser leveling & measuring tools in the North American markets.
So why is Bosch Tools interested in this contractor oriented brand of laser products when Stanley has apparently lost interest? There are several takes on this, first Bosch is extremely diverse around the world and therefore less impacted by swings in the US construction market. If Bosch can capitalize on the success of CST/Berger in the US and duplicate it around the world they should see a solid increase in sales. Secondly, Bosch has only recently introduced its first professional/consumer measuring tools. If they were to incorporate the products of CST/Berger into the Bosch Tool family and make the price more reachable they could see serious increases in sales from contractors and consumers alike.
What is Stanley going to do with all that money? They actually already spent it and then some to acquire 100% of the Sonitrol Corporation for $275 million. The Sonitrol Corporation provides security services, access control and fire detection to commercial clients. The transaction will bring a new commercial customer base to Stanley’s Convergent Security Solutions business.
John F. Lundgren, Chairman and Chief Executive Officer, commented: "These two transactions are important steps toward advancing our growth strategy and repositioning the company to be less dependent on construction and DIY markets. We continue to be strongly committed to shifting the company’s portfolio into higher-growth, higher-return areas such as electronic security. The addition of Sonitrol, with its iconic brand and strong franchisee and direct sales network, expands the scale of our existing North American monitoring operation, increases our recurring revenue and adds breadth and depth to our electronic security product offering."
The recent down turn in the US construction market has not been an easy situation for many tool companies. It is completely understandable for a company such as Stanley Works to want to diversify their exposure. Stanley’s Bostitch line of air nailers is facing hard times as well with the slow down in new home building. Bosch has not only limited their risk with global reach but they have been in many diverse industries for years including security systems, car parts and even kitchen appliances.
Bosch is committed to strengthening their power tools brand and there could potentially be additional acquisitions to make in the near future. The immediate slow down will most likely turn around but it has made some companies much more interested in selling it appears.
