As filed with the U.S. Securities and Exchange Commission on December 4, 2009

Registration No. 333-[     ]

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

The Stanley Works

(Exact name of registrant as specified in its charter)

 

 

1000 Stanley Drive

New Britain, CT 06053

(860) 225-5111

(Address, including ZIP code, and telephone number,

including area code, of registrant’s principal executive offices)

 

Bruce H. Beatt, Esq.

Vice President, General Counsel and Secretary

The Stanley Works

1000 Stanley Drive

New Britain, CT 06053

(860) 225-5111

(Name, address, including ZIP code, and telephone number,

including area code, of agent for service)

 

Copies to:

 

 

Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective and upon completion of the merger described in the enclosed joint proxy statement/prospectus.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

 

o  Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

 

o  Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

CALCULATION OF REGISTRATION FEE

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

PRELIMINARY— SUBJECT TO COMPLETION — DATED DECEMBER 4, 2009

 

 

MERGER PROPOSAL — YOUR VOTE IS VERY IMPORTANT

 

The board of directors of The Stanley Works (“Stanley”) and the board of directors of The Black & Decker Corporation (“Black & Decker”) have agreed to a strategic combination of their two companies under the terms of the Agreement and Plan of Merger, dated as of November 2, 2009 (the “merger agreement”). Upon completion of the merger, Black & Decker will become a wholly owned subsidiary of Stanley.

 

If the merger is completed, Black & Decker stockholders will receive a fixed ratio of 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights) for each share of Black & Decker common stock that they own. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Based on the closing price of Stanley common stock on the New York Stock Exchange (the “NYSE”) on October 30, 2009, the last trading day before public announcement of the merger, the 1.275 exchange ratio represented approximately $57.67 in value for each share of Black & Decker common stock. Based on such price on          ,          , the last trading day before the date of this joint proxy statement/prospectus, the 1.275 exchange ratio represented approximately $           in value for each share of Black & Decker common stock. Stanley shareholders will continue to own their existing Stanley shares.

 

Based on the estimated number of shares of Stanley and Black & Decker common stock to be outstanding immediately prior to the closing of the merger, we estimate that upon such closing, current Stanley shareholders will own approximately 50.5% of the combined company and former Black & Decker stockholders will own approximately 49.5% of the combined company. Stanley common stock and Black & Decker common stock are both traded on the NYSE under the symbols SWK and BDK, respectively.

 

At the special meeting of Stanley shareholders, Stanley shareholders will be asked to vote on the issuance of Stanley common stock to Black & Decker stockholders in the merger and an amendment to the certificate of incorporation of Stanley to increase the number of authorized shares of Stanley common stock and to change the name of Stanley to “Stanley Black & Decker, Inc.”. Additionally, Stanley shareholders will be asked to vote on an amendment to Stanley’s 2009 Long Term Incentive Plan to increase the number of shares available for issuance under such plan. At the special meeting of Black & Decker stockholders, Black & Decker stockholders will be asked to vote on the approval of the merger.

 

We cannot complete the merger unless the shareholders of both of our companies approve the respective proposals related to the merger. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend your special meeting in person, please vote your shares as promptly as possible so that your shares may be represented and voted at the Stanley or Black & Decker special meeting, as applicable. If you are a Stanley shareholder, please note that a failure to vote your shares may result in a failure to establish a quorum for the Stanley special meeting. If you are a Black & Decker stockholder, please note that a failure to vote your shares has the same effect as a vote against the merger.

 

The Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger, “FOR” the proposal to amend the Stanley certificate of incorporation and “FOR” the proposal to amend the Stanley 2009 Long-Term Incentive Plan. The Black & Decker board of directors recommends that the Black & Decker stockholders vote “FOR” the proposal to approve the merger.

 

The obligations of Stanley and Black & Decker to complete the merger are subject to the satisfaction or waiver of several conditions. More information about Stanley, Black & Decker and the merger is contained in this joint proxy statement/prospectus. You should read this entire joint proxy statement/prospectus carefully, including the section entitled “Risk Factors” beginning on page 19.

 

We look forward to the successful combination of Stanley and Black & Decker.

Sincerely,

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

This joint proxy statement/prospectus is dated          ,          and is first being mailed to the shareholders of Stanley and stockholders of Black & Decker on or about          ,          .

 

The Stanley Works
1000 Stanley Drive
New Britain, CT 06053
(860) 225-5111

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On          , 2010

 

Dear Shareholders of The Stanley Works:

 

We are pleased to invite you to attend a special meeting of shareholders of The Stanley Works, a Connecticut corporation (“Stanley”), which will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at   a.m. for the following purposes:

 

 

Stanley will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement of it. Please refer to the remainder of the joint proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the Stanley special meeting.

 

Holders of shares of Stanley common stock at the close of business on          ,          are entitled to vote at the meeting and any adjournment or postponement thereof.

 

The issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long-Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on the proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal.

 

Completion of the merger is conditioned on approval of the issuance of Stanley common stock in the merger and approval of the amendment to Stanley’s certificate of incorporation, but is not conditioned on approval of the amendment to the Stanley 2009 Long-Term Incentive Plan.

 

Your vote is important. Whether or not you expect to attend in person, we urge you to authorize a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the Stanley special meeting.

 

Bruce H. Beatt

Secretary

 

New Britain, CT

          ,

 

The Black & Decker Corporation

701 East Joppa Road

Towson, MD 21286

(410) 716-3900

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held On          , 2010

 

Dear Stockholders of The Black & Decker Corporation:

 

We are pleased to invite you to attend a special meeting of stockholders of The Black & Decker Corporation (“Black & Decker”), which will be held at          , on          , 2010, at   a.m. for the following purposes:

 

 

Black & Decker will transact no other business at the special meeting. Please refer to the remainder of the joint proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the Black & Decker special meeting.

 

Holders of shares of Black & Decker common stock at the close of business on          ,     , are entitled to vote at the special meeting and any adjournment or postponement of the special meeting.

 

Approval of the merger requires the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker.

 

Your vote is important. Whether or not you expect to attend in person, we urge you to authorize a proxy to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning your proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the Black & Decker special meeting. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by your bank, broker or other nominee. In lieu of receiving a proxy card, participants in Black & Decker’s 401(k) plan have been furnished with voting instruction cards. If you hold shares through Black & Decker’s 401(k) plan, please follow the instructions on your voting instruction card.

 

Your Board of Directors recommends a vote “FOR” the merger.

 

By Order of the Board of Directors

 

Natalie A. Shields

Vice President and Corporate Secretary

          ,     

ADDITIONAL INFORMATION

 

This joint proxy statement/prospectus incorporates important business and financial information about Stanley and Black & Decker from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

 

Investors may also consult Stanley’s or Black & Decker’s website for more information about Stanley or Black & Decker, respectively. Stanley’s website is www.stanleyworks.com. Black & Decker’s website is www.bdk.com. Additional information about the merger is available at www.stanleyblackanddecker.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.

 

If you would like to request any documents, please do so by          ,          in order to receive them before the special meetings.

 

For a more detailed description of the information incorporated by reference in this joint proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 149.

 

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

 

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Stanley, constitutes a prospectus of Stanley under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights) to be issued to Black & Decker stockholders in the merger. This joint proxy statement/prospectus also constitutes a joint proxy statement of both Stanley and Black & Decker under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of Stanley shareholders and a notice of meeting with respect to the special meeting of Black & Decker stockholders.

 

You should rely only on the information contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated          ,          . You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our mailing of this joint proxy statement/prospectus to Stanley shareholders or Black & Decker stockholders nor the issuance by Stanley of common stock in connection with the merger will create any implication to the contrary.

 

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this joint proxy statement/prospectus regarding Stanley has been provided by Stanley and information contained in this joint proxy statement/prospectus regarding Black & Decker has been provided by Black & Decker.

TABLE OF CONTENTS

 

 

 

The following are some questions that you, as a shareholder of Stanley or stockholder of Black & Decker, may have regarding the merger and the other matters being considered at the special meetings and the answers to those questions. Stanley and Black & Decker urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the merger and the other matters being considered at the special meetings. Additional important information is also contained in the Annexes to and the documents incorporated by reference into this joint proxy statement/prospectus. All references in this joint proxy statement/prospectus to “Stanley” refer to The Stanley Works, a Connecticut corporation; all references in this joint proxy statement/prospectus to “Black & Decker” refer to The Black & Decker Corporation, a Maryland corporation; all references in this joint proxy statement/prospectus to “Blue Jay Acquisition Corp.” refer to Blue Jay Acquisition Corp., a Maryland corporation and a direct wholly owned subsidiary of Stanley; unless otherwise indicated or as the context requires, all references in this joint proxy statement/prospectus to “we”, “our” and “us” refer to Stanley and Black & Decker collectively; and all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of November 2, 2009, among Black & Decker, Stanley and Blue Jay Acquisition Corp., a copy of which is included as Annex A to this joint proxy statement/prospectus. Stanley following completion of the merger is sometimes referred to in this joint proxy statement/prospectus as the “combined company”.

 

 

 

In order to complete the merger:

 

 

Stanley shareholders are also being asked to approve an amendment to the Stanley 2009 Long-Term Incentive Plan to increase the number of shares available to be issued under such plan.

 

Stanley and Black & Decker will hold separate special meetings to obtain these approvals. This joint proxy statement/prospectus contains important information about the merger and the meetings of the shareholders of Stanley and stockholders of Black & Decker, and you should read it carefully.

 

Your vote is important. You do not need to attend the special meetings in person to vote. We encourage you to vote as soon as possible.

 

 

 

Stanley shareholders will not receive any merger consideration and will continue to hold their shares of Stanley common stock.

 

 

 

 

 

 

 

If you hold Stanley shares or Black & Decker shares in “street name” through a stock brokerage account or through a bank or other nominee, please follow the voting instructions provided by your broker, bank or other nominee to ensure that your shares are represented at your special meeting. If you hold shares through an employee plan provided by Stanley or Black & Decker, please see the question below “Q: How are my employee plan shares voted?”.

 

 

 

Please follow the voting instructions provided by your broker, bank or other nominee so that they may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to Stanley or Black & Decker or by voting in person at your special meeting unless you first provide a proxy from your broker, bank or other nominee.

 

If you are a Stanley shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any matter over which they do not have discretionary authority. Such a broker non-vote will have no effect on the vote on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock are voted (or vote to abstain) on such proposal.

 

If you are a Black & Decker stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares over which they

do not have discretionary authority, which will have the same effect as a vote against the proposal to approve the merger.

 

 

 

 

In addition, since only the trustee of the Stanley 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Stanley 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Stanley 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your allocated shares in the same proportion as it votes the allocated shares for which instructions are received from participants and beneficiaries of deceased participants. The trust agreement also provides that unallocated shares are to be voted by the trustee in the same proportion as it votes allocated shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your allocated shares, you will in effect be providing instructions with respect to a portion of the unallocated shares and a portion of the allocated shares for which instructions were not provided as well. Voting of the Stanley 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Stanley 401(k) Plan participants in deciding how to vote the shares. Therefore, irrespective of these voting provisions, it is possible that the trustee may decide to vote allocated shares for which it does not receive instructions (as well as unallocated shares) in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes shares allocated to you in the Stanley 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Stanley 401(k) Plan and you also own other shares of common stock outside of your Stanley 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Stanley 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Stanley common stock, or voting instruction card if you hold additional shares of Stanley common stock through a broker, bank or other nominee. You must vote shares that you hold as a shareholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Stanley 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Stanley common stock.

 

 

 

 

In addition, since only the trustee of the Black & Decker 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Black & Decker 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Black & Decker 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your shares in the same proportion as it votes the shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your shares, you will in effect be providing instructions with respect to a portion of the shares allocated to other participants for which instructions were not provided as well. Voting of the Black & Decker 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Black & Decker 401(k) Plan participants in deciding how to vote the shares. Therefore, it is possible that the trustee may vote shares for which it does not receive instructions in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes your shares in the Black & Decker 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Black & Decker 401(k) Plan and you also own other shares of common stock outside of your Black & Decker 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Black & Decker 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Black & Decker common stock, or voting instruction card if you hold additional shares of Black & Decker common stock through a broker, bank or other nominee. You must vote shares that you hold as a stockholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Black & Decker 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Black & Decker common stock.

 

 

 

 

 

 

 

The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect on this proposal, assuming a quorum is present.

 

 

 

 

 

 

 

 

 

 

If you are a record holder of either Stanley or Black & Decker:  If you are a record holder of shares, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:

 

 

If you choose either of the first two methods, your notice of revocation or your new proxy must be received by Stanley or Black & Decker, as applicable, no later than the beginning of the applicable special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.

 

If you hold shares of either Stanley or Black & Decker in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.

 

If you hold Stanley shares in the Stanley 401(k) Plan:  If you hold shares of Stanley common stock in the Stanley 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Stanley 401(k) Plan:

 

 

If you hold Black & Decker shares in the Black & Decker 401(k) Plan:  If you hold shares of Black & Decker common stock in the Black & Decker 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Black & Decker 401(k) Plan:

 

 

 

 

 

 

 

 

 

 

If you are a Stanley shareholder, you are not required to take any action with respect to your shares of Stanley common stock.

 

 

 

 

 

 

 

 

 

 

SUMMARY

 

The Companies

 

The Merger and the Merger Agreement

	•	six members of the Black & Decker board of directors (including Mr. Archibald) are expected to become directors of the combined company, and certain of the executive officers of Black & Decker will become executive officers of the combined company,
	•	Mr. Archibald is a party to an agreement with Black & Decker that provides him with certain benefits upon a change in control of Black & Decker, and Mr. Archibald and Stanley entered into an executive chairman agreement that only becomes effective upon completion of the merger,
	•	certain executive officers of Black & Decker (other than Mr. Archibald) are parties to severance benefits agreements with Black & Decker that provide for the payment of specified benefits if the executive’s employment terminates under certain circumstances following the merger,
	•	all of the executive officers of Black & Decker are entitled to payment of a cash award under certain long-term incentive plans upon completion of the merger that are otherwise payable in January 2011,
	•	all outstanding shares of restricted stock, restricted stock units, and stock options held by the executive officers of Black & Decker (other than Mr. Archibald) vested upon execution of the merger agreement,
	•	the entry into the merger agreement resulted in an increase in each participant’s benefits under The Black & Decker Supplemental Executive Retirement Plan, and
	•	the directors and executive officers of Black & Decker are entitled to rights to indemnification, advancement of expenses and exculpation and to continued coverage under a directors and officers insurance policy.

	•	by mutual written consent of Stanley and Black & Decker;
	•	by either Stanley or Black & Decker if:

	•	the merger is not completed by June 30, 2010, subject to a three-month extension under certain circumstances;
	•	certain legal restraints regarding the merger become final and nonappealable;
	•	the Stanley shareholders fail to approve either the issuance of Stanley common stock in connection with the merger or the amendment to Stanley’s certificate of incorporation;
	•	the Black & Decker stockholders fail to approve the merger; or
	•	the other party breaches the merger agreement in a way that would entitle the party seeking to terminate the agreement not to complete the merger, subject to the right of the breaching party to cure the breach.

 

The Stanley Special Meeting

	•	to vote on a proposal to approve the issuance of Stanley common stock to Black & Decker stockholders in connection with the merger;

	•	to vote on a proposal to amend the certificate of incorporation of Stanley to (a) increase the authorized number of shares of Stanley common stock from 200,000,000 to 300,000,000 and (b) change the name of Stanley to “Stanley Black & Decker, Inc.”;
	•	to vote on a proposal to amend the Stanley 2009 Long-Term Incentive Plan to increase the number of shares available to be issued under such plan; and
	•	to vote upon an adjournment of the Stanley special meeting (if necessary or appropriate, including to solicit additional proxies if there are not sufficient votes for the approval of any of the foregoing proposals).

	•	The issuance of Stanley common stock to Black & Decker stockholders in connection with the merger and the amendment to the Stanley 2009 Long Term Incentive Plan will each be approved if a majority of the votes cast on each such proposal vote in favor of such proposal, assuming that the total votes cast on such proposal represents over 50% of all Stanley common stock entitled to vote on such proposal. Votes to abstain are treated the same as shares voted against the proposal. Broker non-votes will have no effect, assuming over 50% of all shares of Stanley common stock entitled to vote are voted (or vote to abstain) on the proposal.
	•	The amendment to Stanley’s certificate of incorporation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.
	•	The adjournment of the Stanley special meeting will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against the proposal. Votes to abstain and broker non-votes will have no effect.

 

The Black & Decker Special Meeting

	•	to approve the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger) on substantially the terms and conditions set forth in the merger agreement, pursuant to which Blue Jay Acquisition Corp. will be merged with and into Black & Decker and each outstanding share of common stock of Black & Decker will be converted into the right to receive 1.275 shares of common stock of Stanley (and associated Series A Junior Participating Preferred Stock purchase rights), with cash paid in lieu of fractional shares; and
	•	to approve an adjournment of the special meeting, if necessary, including to solicit additional proxies if there are not sufficient votes for the proposal to approve the merger.

	•	Approval of the merger proposal requires approval by the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of outstanding common stock of Black & Decker.
	•	Approval of any proposal to adjourn the Black & Decker special meeting, if necessary, including for the purpose of soliciting additional proxies, requires the affirmative vote of a majority of the votes cast on the proposal at the Black & Decker special meeting.

 

Litigation Related to the Merger (see page 86)

 

The Amendment to the Stanley 2009 Long-Term Incentive Plan (see page 121)

 

Selected Historical Consolidated Financial Data of Stanley

		As of and for the
		Nine Months Ended
		Oct. 3,				Sept. 27,				As of the End of and for the Fiscal Year
		2009				2008				2008(f)				2007				2006(g)				2005				2004
		(Unaudited)
		($ in millions, except per share amounts)
Continuing Operations:
Net sales		$	2,768			$	3,340			$	4,426			$	4,360			$	3,897			$	3,183			$	2,930
Net earnings		$	171			$	215			$	219			$	321			$	279			$	262			$	229
Basic earnings per share:
Continuing operations		$	2.15			$	2.72			$	2.77			$	3.89			$	3.40			$	3.14			$	2.79
Discontinued operations(a)(b)		$	(0.04	)		$	1.17			$	1.11			$	0.14			$	0.13			$	0.09			$	1.68
Total basic earnings per share		$	2.11			$	3.89			$	3.88			$	4.03			$	3.53			$	3.23			$	4.47
Diluted earnings per share:
Continuing operations		$	2.14			$	2.69			$	2.74			$	3.82			$	3.33			$	3.07			$	2.72
Discontinued operations(a)(b)		$	(0.04	)		$	1.15			$	1.10			$	0.13			$	0.13			$	0.08			$	1.64
Total diluted earnings per share		$	2.10			$	3.84			$	3.84			$	3.95			$	3.46			$	3.16			$	4.36
Percent of net sales:
Cost of sales			59.7	%			61.7	%			62.2	%			62.1	%			63.7	%			64.1	%			63.3	%
Selling, general and administrative(c)			27.4	%			24.9	%			25.0	%			23.8	%			23.9	%			22.5	%			23.2	%
Interest, net			1.7	%			1.9	%			1.9	%			2.0	%			1.7	%			1.1	%			1.2	%
Other, net			1.9	%			2.1	%			2.3	%			1.9	%			1.3	%			1.4	%			1.4	%
Earnings before income taxes			8.4	%			8.7	%			6.6	%			9.8	%			9.0	%			10.8	%			10.7	%
Net earnings			6.2	%			6.4	%			4.9	%			7.4	%			7.2	%			8.2	%			7.8	%

		As of and for the
		Nine Months Ended
		Oct. 3,				Sept. 27,				As of the End of and for the Fiscal Year
		2009				2008				2008(f)				2007				2006(g)				2005				2004
		(Unaudited)
		($ in millions, except per share amounts)
Balance sheet data:
Total assets(d)		$	4,803			$	5,111			$	4,867			$	4,741			$	3,926			$	3,545			$	2,851
Long-term debt		$	1,087			$	1,155			$	1,384			$	1,165			$	679			$	895			$	482
The Stanley Works Shareowners’ equity(e)		$	1,911			$	1,893			$	1,706			$	1,754			$	1,548			$	1,437			$	1,229
Ratios:
Current ratio			1.1				1.2				1.3				1.4				1.4				2.2				1.7
Total debt to total capital			43.1	%			46.0	%			48.6	%			45.4	%			39.2	%			42.6	%			32.2	%
Income tax rate — continuing operations			25.1	%			25.6	%			24.7	%			24.9	%			19.8	%			23.4	%			26.4	%
Return on average equity — continuing operations			9.6	%			11.9	%			12.8	%			19.5	%			18.9	%			19.8	%			21.7	%
Common stock data:
Dividends per share		$	0.97			$	0.94			$	1.26			$	1.22			$	1.18			$	1.14			$	1.08
Equity per share		$	23.86			$	24.03			$	21.63			$	21.82			$	18.92			$	17.15			$	14.92
Market price per share — high		$	43.35			$	52.18			$	52.18			$	64.25			$	54.59			$	51.75			$	49.33
Market price per share — low		$	22.61			$	40.56			$	24.19			$	47.01			$	41.60			$	41.51			$	36.42
Average shares outstanding (in 000’s):
Basic			79,499				78,867				78,897				82,313				81,866				83,347				82,058
Diluted			79,951				80,025				79,874				84,046				83,704				85,406				84,244
Other information:
Average number of employees			17,832				17,698				17,862				17,344				16,699				13,605				12,817
Shareowners of record at end of the period			12,393				12,549				12,593				12,482				12,755				13,137				13,238

(a)		Amounts in 2008 reflect an $84 million after-tax gain recorded in discontinued operations for the sale of Stanley’s CST/berger laser measuring business.
(b)		Amounts in 2004 reflect an after-tax gain of $119 million in discontinued operations for the sale of Stanley’s residential entry door business and home décor business.
(c)		SG&A is inclusive of the Provision for Doubtful Accounts.
(d)		Item includes assets held for sale related to discontinued operations at September 27, 2008 and as of the fiscal years ended 2007, 2006, 2005, and 2004.
(e)		Shareowners’ equity was reduced by $14 million in fiscal 2007 for the adoption of FASB ASC Topic 740 “Income Taxes”. Shareowners’ equity as of December 30, 2006 decreased $61 million from the adoption of FASB ASC Topic 715 “Compensation-Retirement Benefits”.
(f)		In the fourth quarter of 2008, Stanley recognized $61 million, or $0.54 per diluted share, of pre-tax restructuring and asset impairment charges from continuing operations pertaining to cost actions taken in response to weak economic conditions.
(g)		Diluted earnings per share in 2006 reflects $0.07 of expense for stock options related to the adoption of FASB ASC Topic 718 “Compensation — Stock Compensation”.

 

Selected Historical Consolidated Financial Data of Black & Decker

		As of and for the
		Nine Months Ended
		Sept. 27,				Sept. 28,				As of and for the Year Ended December 31,(a)
		2009(b)				2008(a)(c)				2008(d)				2007(e)				2006				2005(f)(g)				2004(f)
		(Unaudited)
		($ in millions, except per share amounts)
Sales		$	3,473.8			$	4,708.3			$	6,086.1			$	6,563.2			$	6,447.3			$	6,523.7			$	5,398.4
Net earnings from continuing operations		$	98.6			$	249.9			$	293.6			$	518.1			$	486.1			$	532.2			$	430.7
(Loss) earnings from discontinued operations(h)			—				—				—				—				—			$	(0.1	)		$	14.9
Net earnings		$	98.6			$	249.9			$	293.6			$	518.1			$	486.1			$	532.1			$	445.6
Basic earnings per share:
Continuing operations		$	1.63			$	4.11			$	4.83			$	7.96			$	6.67			$	6.68			$	5.37
Discontinued operations			—				—				—				—				—				—			$	0.19
Net earnings per common share — basic		$	1.63			$	4.11			$	4.83			$	7.96			$	6.67			$	6.68			$	5.56
Diluted earnings per share:
Continuing operations		$	1.62			$	4.04			$	4.77			$	7.78			$	6.51			$	6.51			$	5.30
Discontinued operations			—				—				—				—				—				—			$	0.18
Net earnings per common share — assuming dilution		$	1.62			$	4.04			$	4.77			$	7.78			$	6.51			$	6.51			$	5.48
Total assets		$	5,388.0			$	5,567.0			$	5,183.3			$	5,410.9			$	5,247.7			$	5,842.4			$	5,555.0
Long-term debt		$	1,722.2			$	1,405.3			$	1,444.7			$	1,179.1			$	1,170.3			$	1,030.3			$	1,200.6
Redeemable preferred stock of subsidiary			—				—				—				—				—				—			$	192.2
Cash dividends per common share		$	0.66			$	1.26			$	1.68			$	1.68			$	1.52			$	1.12			$	0.84

(a)		Effective January 1, 2009, Black & Decker adopted a new accounting standard that clarifies whether instruments granted in share-based payment transactions should be included in the computation of earnings per share using the two-class method prior to vesting, and, as required, retrospectively adjusted basic and diluted earnings per share for all prior periods to reflect the adoption of that standard.

(b)		Earnings from continuing operations for the nine months ended September 27, 2009 include a restructuring charge of $11.9 million before taxes ($8.4 million after taxes).
(c)		Earnings from continuing operations for the nine months ended September 28, 2008 include a restructuring charge of $33.9 million before taxes ($24.8 million after taxes).
(d)		Earnings from continuing operations for 2008 include a restructuring charge of $54.7 million before taxes ($39.6 million after taxes).
(e)		Earnings from continuing operations for 2007 include a favorable $153.4 million settlement of tax litigation. In addition, earnings from continuing operations for 2007 include a charge for an environmental remediation matter of $31.7 million before taxes ($20.6 million after taxes) and a restructuring charge of $19.0 million before taxes ($12.8 million after taxes).
(f)		Black & Decker adopted the stock-based compensation expense recognition requirements of Accounting Standards Codification (ASC) 718, “Compensation — Stock Compensation,” effective January 1, 2006, using the modified retrospective method of adoption whereby Black & Decker restated all prior periods presented based on amounts previously recognized for purposes of pro forma disclosures. Amounts in this table for 2005 and 2004 reflect such restated amounts.
(g)		Earnings from continuing operations for 2005 include a favorable $55.0 million before taxes ($35.8 million after taxes) settlement of environmental and product liability coverage litigation with an insurer. In addition, earnings from continuing operations for 2005 includes $51.2 million of incremental tax expense resulting from the repatriation of $888.3 million of foreign earnings under the American Jobs Creation Act of 2004.
(h)		(Loss) earnings from discontinued operations represent the earnings, net of applicable income taxes, of Black & Decker’s discontinued European security hardware business. Loss from discontinued operations for the year ended December 31, 2005, includes a loss on sale of discontinued operations of $0.1 million. Earnings from discontinued operations for the year ended December 31, 2004, include a gain on sale of discontinued operations of $12.7 million. That gain was net of a $24.4 million goodwill impairment charge associated with the DOM security hardware business. The earnings of the discontinued operations do not reflect any expense for interest allocated by or management fees charged by Black & Decker.

 

Summary Unaudited Pro Forma Condensed Combined Financial Information

		Twelve Months Ended				Nine Months Ended
		January 3, 2009				October 3, 2009
		($ in millions, except per share amounts)
Summary Statement of Pro Forma Combined Income Data:
Net sales		$	10,512.3			$	6,241.5
Net earnings from continuing operations attributable to Stanley/Black & Decker		$	464.1			$	218.8
Basic earnings per share of common stock from continuing operations		$	2.97			$	1.40
Diluted earnings per share of common stock from continuing operations		$	2.93			$	1.39

		As of
		October 3, 2009
		($ in millions)
Summary Pro Forma Combined Balance Sheet Data:
Total assets		$	13,656.2
Long-term debt		$	2,687.2
Total shareowners’ equity		$	5,797.0

 

Selected Comparative Per Share Market Price and Dividend Information

		Stanley												Black & Decker
										Dividends												Dividends
		High				Low				Declared				High				Low				Declared
2007
First Quarter		$	58.99			$	49.95			$	0.30			$	90.91			$	78.81			$	0.42
Second Quarter		$	63.68			$	54.63			$	0.30			$	96.07			$	81.40			$	0.42
Third Quarter		$	64.25			$	52.41			$	0.31			$	97.01			$	79.30			$	0.42
Fourth Quarter		$	58.99			$	47.01			$	0.31			$	92.30			$	69.15			$	0.42
2008
First Quarter		$	52.18			$	43.69			$	0.31			$	74.24			$	61.71			$	0.42
Second Quarter		$	51.08			$	44.50			$	0.31			$	71.23			$	57.50			$	0.42
Third Quarter		$	49.58			$	40.56			$	0.32			$	69.50			$	51.56			$	0.42
Fourth Quarter		$	43.93			$	24.19			$	0.32			$	62.09			$	32.31			$	0.42
2009
First Quarter		$	36.68			$	22.61			$	0.32			$	46.66			$	20.10			$	0.42
Second Quarter		$	40.05			$	28.32			$	0.32			$	41.28			$	27.10			$	0.12
Third Quarter		$	43.35			$	31.20			$	0.33			$	51.12			$	26.44			$	0.12

 

Certain Historical and Pro Forma Per Share Data

		As of and for the				As of and for the
		Nine Months Ended				Year Ended
		October 3, 2009				January 3, 2009
Stanley Historical Data Per Common Share
Income from continuing operations
Basic		$	2.15			$	2.77
Diluted		$	2.14			$	2.74
Dividends declared per common share		$	0.97			$	1.26
Book value per share		$	23.86			$	21.63

		As of and for the				As of and for the
		Nine Months Ended				Year Ended
		September 27, 2009				December 31, 2008
Black & Decker Historical Data Per Common Share
Income from continuing operations
Basic		$	1.63			$	4.83
Diluted		$	1.62			$	4.77
Dividends declared per common share		$	0.66			$	1.68
Book value per share		$	20.71			$	18.72

		As of and for the				As of and for the
		Nine Months Ended				Year Ended
		October 3, 2009				January 3, 2009
Stanley Pro Forma Combined Data Per Common Share
Income from continuing operations
Basic		$	1.40			$	2.97
Diluted		$	1.39			$	2.93
Dividends declared per common share		$	0.97			$	1.26
Book value per share(1)		$	36.94				N/A

		As of and for the				As of and for the
		Nine Months Ended				Year Ended
		September 27, 2009				December 31, 2008
Black & Decker Pro Forma Equivalent Per Common Share
Income from continuing operations
Basic		$	1.79			$	3.79
Diluted		$	1.77			$	3.74
Dividends declared per common share		$	1.24			$	1.61
Book value per share(1)		$	47.10				N/A

(1)		Pro forma book value per share as of January 3, 2009 or December 31, 2008 is not meaningful as purchase accounting adjustments were calculated as of October 3, 2009.

 

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in the section entitled “Special Note Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding whether to vote for the Stanley proposals, in the case of Stanley shareholders, or the Black & Decker proposal, in the case of Black & Decker stockholders. In addition, you should read and consider the risks associated with each of the businesses of Stanley and Black & Decker because these risks will also affect the combined company — these risks can be found in Stanley’s and Black & Decker’s respective Annual Reports on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 149.

 

The exchange ratio is fixed and will not be adjusted in the event of any change in either Stanley’s or Black & Decker’s stock price.

 

Upon closing of the merger, each share of Black & Decker common stock will be converted into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights). This exchange ratio is fixed in the merger agreement and will not be adjusted for changes in the market price of either Stanley common stock or Black & Decker common stock. Changes in the price of Stanley common stock prior to completion of the merger will affect the market value that Black & Decker stockholders will receive on the date of the merger. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:

 

 

The price of Stanley common stock at the closing of the merger may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus and on the date of the special meetings of Stanley and Black & Decker. As a result, the market value represented by the exchange ratio will also vary. For example, based on the range of closing prices of Stanley common stock during the period from October 30, 2009, the last trading day before public announcement of the merger, through          ,          , the last trading date before the date of this joint proxy statement/prospectus, the exchange ratio represented a market value ranging from a low of $      to a high of $      for each share of Black & Decker common stock.

 

Because the date that the merger is completed will be later than the date of the special meetings, at the time of your special meeting, you will not know the exact market value of the Stanley common stock that Black & Decker stockholders will receive upon completion of the merger.

 

If the price of Stanley common stock increases between the date of the special meetings and the effective time of the merger, Black & Decker stockholders will receive shares of Stanley common stock that have a market value that is greater than the market value of such shares on the date of the special meetings. If the price of Stanley common stock decreases between the date of the special meetings and the effective time of the merger, Black & Decker stockholders will receive shares of Stanley common stock that have a market value that is less than the market value of such shares on the date of the special meetings. Therefore, because the exchange ratio is fixed, shareholders cannot be sure at the time of the special meetings of the market value of the consideration that will be paid to Black & Decker stockholders upon completion of the merger.

Obtaining required approvals necessary to satisfy closing conditions may delay or prevent completion of the merger.

 

Completion of the merger is conditioned upon the receipt of certain governmental authorizations, consents, orders or other approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and approval by the European Commission under applicable merger regulations. Stanley and Black & Decker intend to pursue all required approvals in accordance with the merger agreement. These approvals may impose conditions on or require divestitures relating to the operations or assets of Stanley or Black & Decker. Such conditions or divestitures may jeopardize or delay completion of the merger or may reduce the anticipated benefits of the merger. Further, no assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the merger agreement. See “The Merger — Summary of the Merger Agreement — Conditions to Completion of the Merger” beginning on page 95 for a discussion of the conditions to the completion of the merger and “The Merger — Regulatory Approvals Required for the Merger” beginning on page 83 for a description of the regulatory approvals necessary in connection with the merger.

 

Failure to complete the merger could negatively impact the stock prices and the future business and financial results of Stanley and Black & Decker.

 

If the merger is not completed, the ongoing businesses of Stanley and Black & Decker may be adversely affected. Additionally, if the merger is not completed, Stanley or Black & Decker may be required to pay a termination fee under the merger agreement of $125 million, and will have to pay certain costs relating to the merger, such as legal, accounting, financial advisor, filing, printing and mailing fees. Any of the foregoing, or other risks arising in connection with the failure of the merger, including the diversion of management attention from pursuing other opportunities during the pendency of the merger, may have an adverse effect on the business, financial results and stock prices of Stanley and Black & Decker.

 

The merger agreement contains provisions that could discourage a potential competing acquiror of either Stanley or Black & Decker.

 

The merger agreement contains “no shop” provisions that, subject to limited exceptions, restrict Stanley’s and Black & Decker’s ability to solicit, encourage, facilitate or discuss competing third-party proposals to acquire stock or assets of Stanley or Black & Decker. Further, even if the Stanley board of directors or the Black & Decker board of directors withdraws or qualifies its recommendation with respect to the merger, it will still be required to submit the matter to a vote at its special meeting. In addition, the other party generally has an opportunity to offer to modify the terms of its proposal in response to any competing acquisition proposals before the board of directors of the company that has received a third-party proposal may withdraw or qualify its recommendation with respect to the merger. In some circumstances, upon termination of the merger agreement one of the parties will be required to pay a termination fee of $125 million to the other party. See “The Merger — Summary of the Merger Agreement — No Solicitation of Alternative Proposals” beginning on page 90, “— Termination of the Merger Agreement” beginning on page 96 and “— Expenses and Termination Fees; Liability for Breach” beginning on page 97.

 

These provisions could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Stanley or Black & Decker from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the $125 million termination fee that may become payable in certain circumstances.

 

If the merger agreement is terminated and either Stanley or Black & Decker determines to seek another business combination, it may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the merger.

The pendency of the merger could adversely affect the business and operations of Stanley and Black & Decker.

 

In connection with the pending merger, some customers of Stanley and Black & Decker may delay or defer decisions, which could negatively impact revenues, earnings and cash flows of Stanley and Black & Decker, regardless of whether the merger is completed. Similarly, current and prospective employees of Stanley and Black & Decker may experience uncertainty about their future roles with Stanley following the merger, which may materially and adversely affect the ability of each of Stanley and Black & Decker to attract and retain key personnel.

 

Several lawsuits have been filed against Stanley and Black & Decker challenging the merger and an adverse ruling in any such lawsuit may prevent the merger from being completed.

 

Black & Decker, members of the Black & Decker board of directors, Stanley and, in one case, Blue Jay Acquisition Corp. were named as defendants in three purported class actions and one stockholder derivative action brought by Black & Decker stockholders challenging the proposed merger, seeking, among other things, to enjoin the defendants from completing the merger on the agreed-upon terms. See “The Merger — Litigation Related to the Merger” beginning on page 86 for more information about the lawsuits related to the merger that have been filed.

 

One of the conditions to the closing of the merger is that no judgment, injunction (whether preliminary, temporary or permanent) or other legal restraint or prohibition shall be in effect that prevents the completion of the merger. As such, if any of the plaintiffs are successful in obtaining an injunction prohibiting the defendants from completing the merger, then such injunction may prevent the merger from becoming effective, or from becoming effective within the expected time frame.

 

If the merger does not qualify as a tax-free reorganization under Section 368(a) of the Code, the stockholders of Black & Decker may be required to pay substantial U.S. federal income taxes.

 

The obligations of Stanley and Black & Decker to complete the merger are conditioned on, respectively, Stanley’s receipt of an opinion of counsel to Stanley, and Black & Decker’s receipt of an opinion of counsel to Black & Decker, to the effect that the merger will qualify as a tax-free reorganization under Section 368(a) of the Code, and that no gain or loss will be recognized as a result of the merger. These opinions will be based upon, among other things, certain representations and assumptions as to factual matters made by Stanley and Black & Decker. The failure of any such representation or assumption to be true could adversely affect the validity of the opinions. Additionally, an opinion of counsel represents counsel’s legal judgment, and is not binding on the IRS or the courts. If the IRS or a court determines that the merger is taxable, Black & Decker stockholders would recognize taxable gain or loss on their receipt of Stanley stock in the merger.

 

The failure to integrate successfully the businesses of Stanley and Black & Decker in the expected time frame would adversely affect Stanley’s future results post-merger.

 

The success of the merger will depend, in large part, on the ability of the post-merger Stanley to realize the anticipated benefits, including cost savings, from combining the businesses of Stanley and Black & Decker. To realize these anticipated benefits, the businesses of Stanley and Black & Decker must be successfully integrated. This integration will be complex and time-consuming. The failure to integrate successfully and to manage successfully the challenges presented by the integration process may result in the combined company not achieving the anticipated benefits of the merger.

 

Potential difficulties that may be encountered in the integration process include the following:

 

 

 

Stanley’s future results will suffer if Stanley does not effectively manage its expanded operations following the merger.

 

Following the merger, the size of Stanley’s business will increase dramatically. Stanley’s future success depends, in part, upon its ability to manage this expanded business, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. Stanley cannot assure you that it will be successful or that Stanley will realize the expected operating efficiencies, cost savings, revenue enhancements and other benefits currently anticipated from the merger.

 

Stanley is expected to incur substantial expenses related to the merger and the integration of Black & Decker.

 

Stanley is expected to incur substantial expenses in connection with the merger and the integration of Black & Decker. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, billing, payroll, manufacturing, marketing and benefits. While Stanley has assumed that a certain level of expenses would be incurred, there are many factors beyond its control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that Stanley expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration expenses likely will result in Stanley taking significant charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present.

 

The credit ratings of Stanley will likely be lowered upon completion of the merger, and Stanley currently intends to increase the size of its credit lines in connection with the merger.

 

Completion of the merger will likely result in the credit rating of Stanley being revised downward. Following the announcement of the merger, Moody’s Investors Service placed several of Stanley’s credit ratings under review for possible downgrade. Also, Standard & Poor’s Ratings Services placed all of its credit ratings of Stanley on CreditWatch with negative implications. If Stanley’s credit ratings are downgraded, it may adversely impact the availability and cost of credit to Stanley.

 

Additionally, in connection with closing the merger, Stanley intends to refinance some or all of the bank indebtedness of Black & Decker. Stanley plans to fund such refinance, as well as its merger transaction expenses, with available cash of the combined company and proceeds (if any) that Stanley obtains from bank borrowings or capital markets issuances on or before the closing date. If these sources of cash are unavailable, unattractive or inadequate, Stanley may be forced to raise funds in alternative manners, which may be more costly or unavailable. Completion of the merger is not conditioned on completing these financing transactions. See “Indebtedness of Stanley Following the Merger” beginning on page 99.

 

Stanley’s and Black & Decker’s businesses are and will be subject to the risks described above. In addition, Stanley and Black & Decker are, and will continue to be, subject to the risks described in Stanley’s and Black & Decker’s respective Annual Reports on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 149 for the location of information incorporated by reference in this joint proxy statement/prospectus.

 

This joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business strategies, operating efficiencies, synergies, revenue enhancements, competitive positions, plans and objectives of management and growth opportunities of Stanley and Black & Decker, and with respect to the merger and the markets for Stanley and Black & Decker common stock and other matters. Statements in this joint proxy statement/prospectus and the documents incorporated by reference herein that are not historical facts are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act. These forward-looking statements, including, without limitation, those relating to the future business prospects, revenues and income of Stanley and Black & Decker, and those related to the merger and the expected benefits thereof, wherever they occur in this joint proxy statement/prospectus or the documents incorporated by reference herein, are necessarily estimates reflecting the judgment of the respective managements of Stanley and Black & Decker and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These forward-looking statements should, therefore, be considered in light of various important factors, including those set forth in this joint proxy statement/prospectus and incorporated by reference into this joint proxy statement/prospectus.

 

Words such as “estimate,” “project,” “plan,” “intend,” “expect,” “anticipate,” “believe,” “would,” “should,” “could” and similar expressions are intended to identify forward-looking statements. These forward-looking statements are found at various places throughout this joint proxy statement/prospectus. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include those set forth in Stanley’s and Black & Decker’s filings with the SEC, including their respective Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q. These important factors also include those set forth under “Risk Factors,” beginning on page 19, as well as, among others, risks and uncertainties relating to:

 

 

Readers are cautioned not to rely on any forward-looking statement, which speaks only as of the date of this joint proxy statement/prospectus or, if such statement is included in another document incorporated into this joint proxy statement/prospectus, as of the date of such other document. The parties undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Readers also should understand that it is not possible to predict or identify all relevant factors that may impact forward-looking statements and that the above list should not be considered a complete statement of all potential risks and uncertainties.

 

The Stanley Works

1000 Stanley Drive

New Britain, CT 06053

Telephone: (860) 225-5111

 

Stanley, a Connecticut corporation, is a diversified worldwide supplier of tools and engineered solutions for professional, industrial and construction and do-it-yourself use, as well as engineered security solutions for industrial and commercial applications. Stanley’s operations are classified into three business segments: Security, Industrial, and Construction & Do-It-Yourself. The Security segment is a provider of access and security solutions primarily for retailers, educational, and financial and healthcare institutions, as well as commercial, governmental and industrial customers. The Industrial segment manufactures and markets professional industrial and automotive mechanics tools and storage systems, hydraulic tools and accessories, plumbing, heating and air conditioning tools, assembly tools and systems, and specialty tools. The Construction & Do-It-Yourself segment manufactures and markets hand tools, consumer mechanics tools, storage systems, pneumatic tools and fasteners.

 

Additional information about Stanley and its subsidiaries is included in documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 149.

 

Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley, is a Maryland corporation that was formed on October 30, 2009 for the purpose of effecting the merger. In the merger, Blue Jay Acquisition Corp. will be merged with and into Black & Decker, with Black & Decker surviving as a wholly owned subsidiary of Stanley.

 

The Black & Decker Corporation

701 East Joppa Rd.

Towson, MD 21286

Telephone: (410) 716-3900

 

Black & Decker, a Maryland corporation, is a leading global manufacturer and marketer of power tools and accessories, hardware and home improvement products, and technology-based fastening systems. With products and services marketed in over 100 countries, Black & Decker enjoys worldwide recognition of its strong brand names and a superior reputation for quality, design, innovation, and value.

 

Additional information about Black & Decker and its subsidiaries is included in documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” on page 149.

 

The special meeting of Stanley shareholders will be held at the Stanley Center for Learning and Innovation, 1000 Stanley Drive, New Britain, CT 06053, on          , 2010, at   a.m.

 

At the Stanley special meeting, Stanley shareholders will be asked:

 

 

Completion of the merger is conditioned on approval of the issuance of Stanley common stock in the merger and approval of the amendment to Stanley’s certificate of incorporation, but is not conditioned on approval of the amendment to the Stanley 2009 Long-Term Incentive Plan.

 

At a special meeting held on November 2, 2009, the Stanley board of directors determined that the merger and the other transactions contemplated by the merger agreement, including the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, are advisable and in the best interests of Stanley and its shareholders. Accordingly, the Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger and “FOR” the proposal to amend Stanley’s certificate of incorporation to increase the number of authorized shares of Stanley common stock and to change Stanley’s name to “Stanley Black & Decker, Inc.”.

 

Additionally, the Stanley board of directors recommends that Stanley shareholders vote “FOR” the proposal to amend the Stanley 2009 Long-Term Incentive Plan.

 

Stanley shareholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger (including the amendment to Stanley’s certificate of incorporation) and the amendment to the Stanley 2009 Long-Term Incentive Plan. In addition, Stanley shareholders are directed to the merger agreement, the form of amendment to Stanley’s certificate of incorporation and the form of amended and restated Stanley 2009 Long-Term Incentive Plan, all of which are included as Annexes in this joint proxy statement/prospectus.

 

Only holders of shares of Stanley common stock at the close of business on          ,          , the record date for the Stanley special meeting, will be entitled to notice of, and to vote at, the Stanley special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Stanley common stock. Each outstanding share of Stanley common stock is entitled to one vote on each proposal and any other matter coming before the Stanley special meeting.

 

On the record date, approximately     % of the outstanding shares of Stanley common stock were held by Stanley directors and executive officers and their affiliates. We currently expect that Stanley’s directors and executive officers will vote their shares in favor of all Stanley proposals, although no director or executive officer has entered into any agreement obligating him or her to do so.

 

Shareholders who hold at least a majority of the shares issued and outstanding and who are entitled to vote at the Stanley special meeting must be present in person or represented by proxy to constitute a quorum for the transaction of business at the Stanley special meeting. Note, however, that even if a quorum is present at the Stanley special meeting, the issuance of Stanley common stock to Black & Decker stockholders and the amendment to the Stanley 2009 Long-Term Incentive Plan can only be approved if over 50% of all Stanley common stock entitled to vote on each such proposal votes (or votes to abstain) on such proposal.

 

All shares of Stanley common stock represented at the Stanley special meeting, including shares that are represented but that vote to abstain, and shares that are represented but that are held by brokers, banks and other nominees who do not have authority to vote such shares (i.e., a broker non-vote), will be treated as present and entitled to vote for purposes of determining the presence or absence of a quorum.

 

The required votes to approve the Stanley proposals are as follows:

 

 

If you are a Stanley shareholder and fail to vote or fail to instruct your broker, bank or other nominee to vote, it will have no effect on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock entitled to vote on each such proposal are voted (or vote to abstain) on such proposal. If you are a Stanley shareholder through the Stanley 401(k) Plan and fail to instruct the trustee how to vote, the trustee will vote your shares as described below under “— Shares Held in the Stanley 401(k) Plan”.

 

If you are a Stanley shareholder and you vote to abstain, it will have the effect of a vote against the issuance of shares of Stanley common stock in the merger and against the amendment to the Stanley 2009 Long-Term Incentive Plan, but will have no effect on the amendment to Stanley’s certificate of incorporation.

 

If you are a record holder of Stanley common stock, a proxy card is enclosed for your use. Stanley requests that you vote your shares by telephone or through the Internet, or sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. Information and applicable deadlines for voting by telephone or through the Internet are set forth on the enclosed proxy card. When the enclosed proxy card is returned properly executed, the shares of Stanley common stock represented by it will be voted at the Stanley special meeting or any adjournment thereof in accordance with the instructions contained in the proxy card. Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had marked, signed and returned a proxy card.

 

Your vote is important. Accordingly, if you are a record holder of Stanley common stock, please sign and return the enclosed proxy card or vote via telephone or the Internet whether or not you plan to attend the Stanley special meeting in person.

 

If a proxy card is signed and returned without an indication as to how the shares of Stanley common stock represented are to be voted with regard to a particular proposal, the Stanley common stock represented by the proxy will be voted in accordance with the recommendation of the Stanley board of directors. At the date hereof, the Stanley board of directors has no knowledge of any business that will be presented for consideration at the special meeting and which would be required to be set forth in this joint proxy statement/prospectus or the related Stanley proxy card other than the matters set forth in Stanley’s Notice of Special Meeting of Shareholders. In accordance with Connecticut law, business transacted at the Stanley special meeting will be limited to those matters set forth in such notice. Nonetheless, if any other matter is properly presented at the Stanley special meeting for consideration, it is intended that the persons named in the enclosed proxy and acting thereunder will vote in accordance with their best judgment on such matter.

 

If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial holder, unless your broker, bank or other nominee has discretionary authority over your shares, you generally have the right to direct your broker, bank or other nominee as to how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which your broker, bank or other nominee does not have discretionary authority. This is often called a “broker non-vote”.

 

Please follow the voting instructions provided by your broker, bank or other nominee, so that they may vote your shares on your behalf. Please note that you may not vote shares held in street name by returning a proxy card directly to Stanley or Black & Decker or by voting in person at your special meeting unless you first provide a proxy from your broker, bank or other nominee.

 

If you are a Stanley shareholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on any matter over which they do not have discretionary authority. Such a broker non-vote will have no effect on the vote on any of the Stanley proposals, assuming a quorum is present and, in the case of the votes to approve the issuance of shares of Stanley common stock in the merger and to approve the amendment to the Stanley 2009 Long-Term Incentive Plan, over 50% of all shares of Stanley common stock are voted (or vote to abstain) on such proposal.

 

If you hold shares through the Stanley 401(k) Plan you can instruct the trustee, The Bank of New York Mellon Corporation, in a confidential manner, how to vote the shares allocated to you in the Stanley 401(k) Plan by one of the following three methods:

 

 

In addition, since only the trustee of the Stanley 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Stanley 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Stanley 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your allocated shares in the same proportion as it votes the allocated shares for which instructions are received from participants and beneficiaries of deceased participants. The trust agreement also provides that unallocated shares are to be voted by the trustee in the same proportion as it votes allocated shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your allocated shares, you will in effect be providing instructions with respect to a portion of the unallocated shares and a portion of the allocated shares for which instructions were not provided as well. Voting of the Stanley 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Stanley 401(k) Plan participants and beneficiaries in deciding how to vote the shares. Therefore, irrespective of these voting provisions, it is possible that the trustee may decide to vote allocated shares for which it does not receive instructions (as well as unallocated shares) in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes shares allocated to you in the Stanley 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Stanley 401(k) Plan and you also own other shares of common stock outside of your Stanley 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Stanley 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Stanley common stock, or voting instruction card if you hold additional shares of Stanley common stock through a broker, bank or other nominee. You must vote shares that you hold as a shareholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Stanley 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Stanley common stock.

 

If you are a record holder of Stanley:   If you are a record holder of shares of Stanley common stock, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:

 

 

If you choose either of the first two methods, your notice of revocation or your new proxy must be received no later than the beginning of the Stanley special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.

 

If you hold shares of Stanley in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.

 

If you hold Stanley shares in the Stanley 401(k) Plan:  If you hold shares of Stanley common stock in the Stanley 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Stanley 401(k) Plan:

 

 

Stanley is soliciting proxies for the Stanley special meeting and, in accordance with the merger agreement, the cost of proxy solicitation for the Stanley special meeting will be borne by Stanley. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Stanley, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Stanley will also request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares and will provide customary reimbursement to such firms for the cost of forwarding these materials. Stanley has retained Innisfree M&A Incorporated to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $75,000, plus a success fee of $25,000 and expenses, for these services.

 

It is Stanley’s policy that all proxies, ballots and tabulations of shareholders who check the box indicated for confidential voting be kept confidential, except where mandated by law and other limited circumstances.

 

For participants in the Stanley 401(k) Plan, your instructions to the trustee on how to vote the shares allocated to you under the Stanley 401(k) Plan will be kept confidential. You do not need to request confidential treatment in order to maintain the confidentiality of your vote.

 

The special meeting of Black & Decker stockholders will be held at           on           , 2010 at   a.m.

 

At the Black & Decker special meeting, Black & Decker stockholders will be asked:

 

 

At a special meeting held on November 2, 2009, the Black & Decker board of directors, by the unanimous vote of its directors, with Mr. Archibald abstaining, declared advisable the merger (including the amendment and restatement of the charter of Black & Decker to be effected as part of the merger), on substantially the terms and conditions set forth in the merger agreement, and directed that the merger be submitted for consideration by the Black & Decker stockholders at the Black & Decker special meeting.

 

The Black & Decker board of directors recommends that the Black & Decker stockholders vote “FOR” the merger proposal.

 

Black & Decker stockholders should carefully read this joint proxy statement/prospectus in its entirety for more detailed information concerning the merger. In addition, Black & Decker stockholders are directed to the merger agreement, which is included as Annex A in this joint proxy statement/prospectus.

 

Only holders of shares of Black & Decker common stock at the close of business on          ,          , the record date for the Black & Decker special meeting, will be entitled to notice of, and to vote at, the Black & Decker special meeting or any adjournments or postponements thereof. On the record date, there were outstanding a total of           shares of Black & Decker common stock. Each outstanding share of Black & Decker common stock is entitled to one vote on each proposal and any other matter coming before the Black & Decker special meeting.

 

On the record date, approximately     % of the outstanding shares of Black & Decker common stock were held by Black & Decker directors and executive officers. We currently expect that Black & Decker’s directors and executive officers will vote their shares in favor of the merger proposal, although no director or executive officer has entered into any agreement obligating him or her to do so.

 

Stockholders entitled to cast a majority of all the votes entitled to be cast at the Black & Decker special meeting must be present in person or by proxy to constitute a quorum for the transaction of business at the Black & Decker special meeting. If a quorum is not present, stockholders present in person or by proxy may,

by a majority vote and without further notice, adjourn the meeting from time to time to a date not more than 120 days after the original record date for the Black & Decker special meeting, but not for a period of more than 30 days at any one time.

 

All shares of Black & Decker common stock represented at the Black & Decker special meeting that are represented but that abstain from voting will be treated as present for purposes of determining the presence or absence of a quorum.

 

The required votes to approve the Black & Decker proposals are as follows:

 

 

If you are a Black & Decker stockholder and fail to vote or fail to instruct your broker, bank or nominee to vote, it will have the same effect as a vote against the merger proposal but will have no effect on any proposal to adjourn the Black & Decker special meeting.

 

If you are a Black & Decker stockholder and you vote to abstain or instruct your broker, bank or nominee to vote to abstain, it will have the same effect as a vote against the merger proposal but will have no effect on any proposal to adjourn the Black & Decker special meeting.

 

If you are a record holder of Black & Decker common stock, a proxy card is enclosed for your use. Black & Decker requests that you vote your shares by telephone or through the Internet, or sign the accompanying proxy card and return it promptly in the enclosed postage-paid envelope. Information and applicable deadlines for authorizing a proxy by telephone or through the Internet are set forth on the enclosed proxy card. When the enclosed proxy card is returned properly executed, the shares of Black & Decker common stock represented by it will be voted at the Black & Decker special meeting or any adjournment thereof in accordance with the instructions contained in the proxy card.

 

Your vote is important. Accordingly, if you are a record holder of Black & Decker, please sign and return the enclosed proxy card or vote via telephone or the Internet whether or not you plan to attend the Black & Decker special meeting in person.

 

If a proxy card is signed and returned without an indication as to how the shares of Black & Decker common stock represented are to be voted with regard to a particular proposal, the Black & Decker common stock represented by the proxy will be voted in accordance with the recommendation of the Black & Decker board of directors. In accordance with Black & Decker’s bylaws and Maryland law, business transacted at the Black & Decker special meeting will be limited to those matters set forth in Black & Decker’s Notice of Special Meeting of Stockholders.

 

If your shares are held in the name of a broker, bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this joint proxy statement/prospectus has been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you must provide the record holder of your

shares with instructions on how to vote your shares if you wish them to be voted. Please follow the voting instructions provided by your bank, broker or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Black & Decker or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your bank or broker. Further, brokers who hold shares of Black & Decker common stock on behalf of their customers may not give a proxy to Black & Decker to vote those shares with respect to the merger proposal without specific instructions from their customers.

 

If you are a Black & Decker stockholder and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker will not vote your shares on any matter over which they do not have discretionary authority (a broker non-vote), which will have the effect of a vote against the merger proposal.

 

If you hold shares through the Black & Decker 401(k) Plan, you can instruct the trustee, T. Rowe Price Trust Company, in a confidential manner, how to vote the shares allocated to you in the Black & Decker 401(k) Plan by one of the following methods:

 

 

In addition, since only the trustee of the Black & Decker 401(k) Plan can vote the shares allocated to you, you will not be able to vote your Black & Decker 401(k) Plan shares personally at the special meeting. Please note that the trust agreement governing the Black & Decker 401(k) Plan provides that if the trustee does not receive your voting instructions, the trustee will vote your shares in the same proportion as it votes the shares for which instructions are received from participants and beneficiaries of deceased participants. Therefore, by providing voting instructions with respect to your shares, you will in effect be providing instructions with respect to a portion of the shares for which instructions were not provided as well. Voting of the Black & Decker 401(k) Plan shares by the trustee is subject to federal pension laws, which require the trustee to act as a fiduciary for Black & Decker 401(k) Plan participants in deciding how to vote the shares. Therefore, it is possible that the trustee may vote shares for which it does not receive instructions in a manner other than on a proportionate basis if it believes that proportionate voting would violate applicable law. The only way to ensure that the trustee votes your shares in the Black & Decker 401(k) Plan in accordance with your wishes is to provide instructions to the trustee in the manner set forth above. If you are a participant (or a beneficiary of a deceased participant) in the Black & Decker 401(k) Plan and you also own other shares of common stock outside of your Black & Decker 401(k) Plan account, you should receive a voting instruction card for shares credited to your account in the Black & Decker 401(k) Plan, and a separate proxy card if you are a record holder of additional shares of Black & Decker common stock, or voting instruction card if you hold additional shares of Black & Decker common stock through a broker, bank or other nominee. You must vote shares that you hold as a stockholder of record, shares that you hold through a broker, bank or other nominee and shares that are allocated to your Black & Decker 401(k) Plan account separately in accordance with each of the proxy cards and voting instruction cards you receive with respect to your shares of Black & Decker common stock.

 

If you are a record holder of Black & Decker:  If you are a record holder of shares of Black & Decker common stock, you can change your vote at any time before your proxy is voted at your special meeting. You can do this in one of three ways:

 

 

If you choose either of the first two methods, your notice of revocation or your new proxy must be received by Black & Decker’s Corporate Secretary, no later than the beginning of the Black & Decker special meeting. If you have voted your shares by telephone or through the Internet, you may revoke your prior telephone or Internet vote by any manner described above.

 

If you hold shares of Black & Decker in “street name”:  If your shares are held in street name, you must contact your broker, bank or other nominee to change your vote.

 

If you hold Black & Decker shares in the Black & Decker 401(k) Plan:  If you hold shares of Black & Decker common stock in the Black & Decker 401(k) Plan, there are two ways in which you may revoke your instructions to the trustee and change your vote with respect to voting the shares allocated to you in the Black & Decker 401(k) Plan:

 

 

Black & Decker is soliciting proxies for the Black & Decker special meeting and, in accordance with the merger agreement, the cost of proxy solicitation for the Black & Decker special meeting will be borne by Black & Decker. In addition to the use of the mail, proxies may be solicited by officers and directors and regular employees of Black & Decker, without additional remuneration, by personal interview, telephone, facsimile or otherwise. Black & Decker also will request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record as of the close of business on the record date and will provide customary reimbursement to such firms for the cost of forwarding these materials. Black & Decker has retained MacKenzie Partners, Inc. to assist in its solicitation of proxies and has agreed to pay them a fee of approximately $250,000, plus reasonable expenses, for these services.

 

Upon completion of the merger, Blue Jay Acquisition Corp., a wholly owned subsidiary of Stanley that has been organized to effect the merger, will merge with and into Black & Decker. Black & Decker will be the surviving corporation in the merger and will become a wholly owned subsidiary of Stanley.

 

In the merger, each outstanding share of Black & Decker common stock (other than shares owned by Stanley or Blue Jay Acquisition Corp., which will be cancelled) will be converted into the right to receive 1.275 shares of Stanley common stock (and associated Series A Junior Participating Preferred Stock purchase rights), with cash paid in lieu of fractional shares. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing of the merger. Stanley shareholders will continue to hold their existing Stanley shares.

 

In light of the nature of Stanley’s and Black & Decker’s businesses, management of each of Stanley and Black & Decker generally is familiar with the other’s businesses. In addition, both companies periodically review and assess developments in the industries in which they participate and the strategic alternatives that are available to enhance stockholder value. As a result of these periodic reviews and assessments, Stanley and Black & Decker have discussed the possibility of a strategic business combination several times over the past 30 years.

 

In February of 2009, Stanley, with the assistance of Deutsche Bank, which was selected by Stanley to act as its financial advisor, began to consider again a strategic business combination with Black & Decker and, on April 23, 2009, the Stanley board of directors authorized Mr. Lundgren, the Chairman and Chief Executive Officer of Stanley, to contact Black & Decker to discuss such a combination.

 

On April 27, 2009, Mr. Lundgren called Mr. Archibald, the Chairman, President and Chief Executive Officer of Black & Decker, and indicated that Stanley was interested in discussing the possible combination of Stanley’s and Black & Decker’s businesses in a strategic transaction. Mr. Lundgren indicated that Stanley had been reviewing the possibility of a transaction with Black & Decker for some time and that he believed a combination of Stanley’s and Black & Decker’s businesses in a stock-for-stock transaction would offer compelling benefits to both companies and their stockholders. In the course of the conversation, Mr. Archibald indicated that the Black & Decker board was not considering a sale of the company, but that he would give the stock-for-stock merger proposal further thought. On April 30, 2009, Mr. Archibald called Mr. Lundgren and indicated that he would be willing to meet with Mr. Lundgren to discuss Stanley’s interest in such a transaction.

 

On June 9, 2009, Mr. Lundgren and Mr. Archibald met for lunch in New York City. In the course of that meeting, Mr. Lundgren outlined Stanley’s concept of a combination of the two companies, the benefits of such a combination and the need for management continuity in connection with integrating the two companies. He indicated that the Stanley board believed a combination represented a good fit for both companies and presented significant cost synergy opportunities that would benefit both companies and their stockholders. In this meeting, Mr. Lundgren and Mr. Archibald both indicated that if a transaction was considered, it was the preference of each of them that his respective company be the surviving company in the transaction. In connection with these discussions, Mr. Archibald stated that, while the economy continued to be a challenge for everyone, Black & Decker was focused on executing its strategic plan to position the company properly when the economy recovered, and reiterated the fact that the Black & Decker board was not considering a sale of the company. At the end of the discussions, Mr. Archibald indicated that he was willing to discuss the benefits to the two companies and their stockholders of a possible combination of Stanley and Black & Decker, but would only be supportive of a transaction if the benefits were compelling to Black & Decker and its stockholders.

On June 16, 2009, Mr. Archibald sent Mr. Lundgren a letter thanking him for taking the time to meet the prior week and exploring structural, financial, governance and employment issues associated with a possible business combination between Stanley and Black & Decker regardless of which company was the surviving company in the transaction. Mr. Archibald indicated that if a combination of Stanley and Black & Decker was to be pursued, Black & Decker would prefer to be the acquiror, but regardless of the structure, the key objective was a strategic transaction that was financially beneficial to the stockholders of both companies.

 

Also on June 16, 2009, the Stanley board of directors held a special meeting at which they discussed, among other things, the current status of discussions with Black & Decker and the terms and conditions that Stanley would be willing to consider. The Stanley board directed Mr. Lundgren to continue pursuing a potential transaction with Black & Decker.

 

Mr. Lundgren and Mr. Archibald then had several conversations between June 18 and June 22, 2009, in which they continued to discuss the possible structural, financial, governance and employment issues of a combination of Stanley’s and Black & Decker’s businesses, including the roles of Mr. Lundgren and Mr. Archibald at the combined company.

 

On June 23, 2009, Mr. Lundgren responded by letter to Mr. Archibald’s letter of June 16 and confirmed their mutual belief that a combination of the two companies could be strategically compelling and financially beneficial to the stockholders of both companies. Among other things, Mr. Lundgren indicated that Stanley was prepared to consider a stock-for-stock merger in which Stanley was the acquiror and Black & Decker stockholders would receive a significant premium for their shares of common stock. Mr. Lundgren also indicated that Stanley was prepared to offer 1.1 shares of Stanley common stock for each share of Black & Decker common stock and, that as part of this proposal, Stanley would seek a commitment from Mr. Archibald to remain with the combined company following the closing of the transaction. Additionally, Mr. Lundgren indicated that Stanley was prepared to begin discussions with Black & Decker to review the cost synergy potential of the transaction as soon as possible.

 

Following receipt of the letter from Mr. Lundgren on June 23, Mr. Archibald had conversations with each of the members of the Black & Decker board in which he advised the directors of Stanley’s interest in a strategic business combination with Black & Decker and reviewed with the directors the letter from Mr. Lundgren setting forth the terms contemplated by Stanley. Mr. Archibald advised the directors that, in addition to conducting the Black & Decker board’s annual strategic business review and planning session at its regularly scheduled July 16 board meeting, he would review the Stanley proposal in detail at the meeting.

 

Additionally, following receipt of the letter from Mr. Lundgren and through July 11, 2009, Mr. Lundgren and Mr. Archibald had several conversations regarding the possible terms of the transaction and the current status of their company’s respective evaluation of the proposed transaction.

 

At Black & Decker’s July 16, 2009 board meeting, as part of its annual strategic business review and planning session, Black & Decker management reviewed Black & Decker’s financial position and operating strategy, the then-current economic challenges and state of the global economy, and Black & Decker management’s forecast for the global economy and Black & Decker’s prospects over the next three calendar years. As has been the case in its annual strategic business review and planning sessions, the Black & Decker board also reviewed Black & Decker’s opportunities for growth by acquisition as well as organically, and the company’s financing capacity to support acquisitions. At the meeting, Mr. Archibald briefed the Black & Decker board on the interest expressed by Stanley, the substance of his communications with Mr. Lundgren since the initial call from Mr. Lundgren and the terms outlined by Mr. Lundgren in his letter of June 23. Black & Decker management further briefed the Black & Decker board on its preliminary views as to the prospects of a combination of Stanley’s and Black & Decker’s businesses, the advantages and disadvantages of such a transaction, the premium being offered to Black & Decker stockholders by Stanley and the value to Black & Decker stockholders if cost synergies in the range of those Stanley believed were achievable were realized. At the conclusion of the meeting, the Black & Decker board authorized the formation of a committee of the board consisting of three independent directors, M. Anthony Burns, Benjamin H. Griswold IV and Robert L. Ryan (the “Black & Decker Transaction Committee”), to assist management and the Black & Decker board in reviewing the Stanley proposal and directed Black & Decker management and the Black &

Decker Transaction Committee to evaluate further the possible benefits to Black & Decker stockholders of a strategic business combination with Stanley. The Black & Decker board then excused Black & Decker management, including Mr. Archibald, so that the non-management directors of the Black & Decker board could discuss the Stanley proposal separately.

 

Following the conclusion of the Black & Decker board meeting on July 16, the Black & Decker Transaction Committee held its initial meeting and invited Mr. Archibald and Charles E. Fenton, Black & Decker’s Senior Vice President and General Counsel, to join the meeting. Mr. Archibald indicated that following the conclusion of the Black & Decker board meeting, Mark H. Willes, Black & Decker’s presiding director, had informed him that the sense of the Black & Decker board was that any transaction with Stanley would need to be as equivalent as possible to a merger of equals. The members of the Black & Decker Transaction Committee confirmed that this was the strong sense of the Black & Decker board. Mr. Fenton reviewed with the Black & Decker Transaction Committee the substance of the proposals he had received from, and the discussions he had conducted with, financial advisors who had been involved with Black & Decker leading up to the July 16 board meeting as well as the need to retain legal counsel to advise the Black & Decker Transaction Committee and the Black & Decker board in connection with its consideration of a possible transaction with Stanley. Following a discussion, the Black & Decker Transaction Committee authorized the retention of J.P. Morgan Securities Inc. as financial advisor and Hogan & Hartson L.L.P. as legal counsel. The Black & Decker Transaction Committee reminded Black & Decker management that the Black & Decker board did not have any interest in a transaction unless it was an all-stock strategic transaction in which Black & Decker stockholders would share in the future growth of the combined company and that, for all practical purposes, was as equivalent as possible to a merger of equals.

 

On July 16, 2009, Mr. Archibald called Mr. Lundgren and advised him that the Black & Decker board had discussed Stanley’s interest in a transaction with Black & Decker. Mr. Archibald indicated that the Black & Decker board had a predisposition for Black & Decker to remain independent, but had authorized Black & Decker management to explore the possible benefits of an all-stock transaction to Black & Decker and its stockholders. Mr. Archibald advised Mr. Lundgren that the Black & Decker board stressed that the transaction would need to be as equivalent as possible to a merger of equals in terms of share ownership and board representation and would have to offer compelling value to Black & Decker and its stockholders, and that the Black & Decker board did not view an exchange ratio of 1.1 as consistent with that approach. Mr. Archibald indicated that the exchange ratio would have to be in the range of 1.2 to 1.3 shares of Stanley common stock for each share of Black & Decker common stock and that a meeting would not be productive if Stanley was unwilling to offer more than an exchange ratio of 1.1. Mr. Lundgren stated that sharing of additional information by the parties, including a joint review of the cost synergy potential of the combination, would be critical to Stanley’s ability to offer an exchange ratio of more than 1.1 and that he thought it made sense for Stanley’s and Black & Decker’s respective financial and legal advisors to meet with management of the two companies and then for Mr. Lundgren and Mr. Archibald to meet to discuss the results of those meetings. Mr. Archibald and Mr. Lundgren decided to proceed with such meetings and indicated that they would have their respective financial advisors discuss the timing and location of the meetings.

 

On July 17, 2009, the Stanley board of directors held a regular meeting. Among other matters, the Stanley board discussed the current status of the proposed transaction with Black & Decker and the terms and conditions that Mr. Archibald described to Mr. Lundgren the previous day and how those terms differed from Stanley’s original proposal. Also on July 17, 2009, Stanley selected Goldman Sachs to act as a financial advisor in connection with the proposed transaction.

 

Following the Stanley board meeting, Hogan & Hartson and Cravath, Swaine & Moore LLP, counsel to Stanley, negotiated the terms of a mutual confidentiality agreement between Stanley and Black & Decker. The confidentiality agreement was executed on July 22, 2009. On July 25, 2009, Cravath sent an initial draft of a merger agreement to Hogan & Hartson. Hogan & Hartson advised Cravath at that time that the Black & Decker board had only authorized Black & Decker management to evaluate the possible benefits to Black & Decker’s stockholders of a strategic business combination with Stanley and that Black & Decker was not prepared to discuss or negotiate a merger agreement at that time.

From July 17 through July 27, 2009, Stanley’s and Black & Decker’s financial advisors and members of Stanley’s and Black & Decker’s financial management teams discussed the scope of information that would be appropriate to share with each other in connection with the planned meetings to enable the parties to understand better each other’s businesses more thoroughly and to evaluate the cost synergy potential of a possible strategic combination of the two companies. In the course of these discussions, financial information and general views as to cost synergy potential were discussed and shared.

 

From July 28 through July 30, 2009, representatives of Stanley and Black & Decker senior management, together with Stanley’s and Black & Decker’s financial and legal advisors, met at Cravath’s offices in New York City. At these meetings, management representatives and the financial and legal advisors to Stanley and Black & Decker conducted due diligence regarding each other and discussed the cost synergy potential available to the companies if they were to combine their businesses. The parties also discussed generally the potential terms of the transaction, including the service of Mr. Archibald as Executive Chairman of the combined company. At the conclusion of the meetings, Mr. Lundgren and Mr. Archibald met to discuss the results of the meetings, the information shared by both companies and the terms of a possible business combination. In the course of that meeting, Mr. Lundgren indicated that while he believed Stanley might be in a position to offer an exchange ratio of more than 1.1 shares of Stanley common stock for each share of Black & Decker common stock, he did not believe that, based on the then current stock price and current and future earnings of both companies and other factors, the Stanley board would be able to offer an exchange ratio of 1.2 or better, which was the bottom end of the range Mr. Archibald had indicated was required by Black & Decker. At the end of the meeting, Mr. Lundgren indicated that he would be discussing the matter the next day with his board and would advise Mr. Archibald if Stanley was able to increase its offer further, but that he hoped Black & Decker would remain open to further discussions now or in the future in light of the benefits such a transaction would offer to both companies and their stockholders.

 

On July 31, 2009, the Stanley board of directors held a special meeting at which they discussed, among other things, the results of the various meetings and negotiations that had taken place over the preceding two weeks and the issues regarding the potential business combination that remained unresolved between the companies. After discussion, the Stanley board determined that Stanley should not indicate a willingness to increase the exchange ratio above 1.2 and, therefore, that discussions would likely be suspended between the companies. Thereafter, Mr. Lundgren called Mr. Archibald and notified Mr. Archibald of the Stanley board’s determination.

 

In early August 2009, J.P. Morgan indicated to Deutsche Bank and Goldman Sachs that the Black & Decker Transaction Committee was meeting on August 10 to review with Black & Decker management the course of the discussions with Stanley and that if Stanley had a revised proposal that it wanted the Black & Decker Transaction Committee to consider, the proposal should be submitted in advance of that meeting. No such revised proposal was submitted by Stanley prior to the August 10 meeting of the Black & Decker Transaction Committee.

 

The Black & Decker Transaction Committee met with Black & Decker management on August 10, 2009. At that meeting, Black & Decker management reviewed with the Black & Decker Transaction Committee the substance of the discussions that had occurred with Stanley since the Black & Decker board and Black & Decker Transaction Committee meetings of July 17. Black & Decker management advised the Black & Decker Transaction Committee that no further proposal had been received from Stanley. The Black & Decker Transaction Committee confirmed that the original offer from Stanley was not consistent with the expectations of the Black & Decker board for a business combination that was the equivalent of a merger of equals.

 

On September 11, 2009, J.P. Morgan contacted Deutsche Bank and Goldman Sachs on behalf of Black & Decker to discuss, among other things, changes in the financial markets, the performance of Stanley’s and Black & Decker’s stock subsequent to the meetings in July and various corporate governance issues and other items in connection with the proposed transaction, and inquired whether Stanley still was interested in discussing the possibility of a business combination with Black & Decker. J.P. Morgan indicated that it had been advised by Black & Decker that the transaction still would need to be structured in a way that was as close as possible to a merger of equals. In the course of the discussions, J.P. Morgan indicated that Black & Decker considered a proposal in which the Black & Decker stockholders received shares of Stanley common

stock totaling 49.9% of the combined equity at closing, which J.P. Morgan indicated was equivalent to an exchange ratio of 1.286 shares of Stanley common stock for each share of Black & Decker common stock, and where the board of the combined company consisted of eight former Stanley directors and seven former Black & Decker directors, to be consistent with the Black & Decker board’s desire for a transaction that was as close as possible to a merger of equals.

 

On September 16, 2009, J.P. Morgan provided updated financial information on behalf of Black & Decker to Deutsche Bank and Goldman Sachs regarding, among other things, Black & Decker’s performance and improved outlook for the third quarter of 2009 and the remainder of the period of the Black & Decker forecasts which had previously been provided to Stanley management and Stanley’s financial advisors. During the next several days, Deutsche Bank and Goldman Sachs discussed this and other related information with Stanley management, including the implications for the potential exchange ratio.

 

During the remainder of the month of September, Stanley’s and Black & Decker’s financial advisors continued to discuss the possibilities of a business combination and various related terms, including the possibility that a substantial portion of Mr. Archibald’s compensation in his proposed capacity as Executive Chairman of the combined company would be contingent on the achievement of cost synergies. In the course of these discussions, Deutsche Bank and Goldman Sachs indicated that they believed, subject to review of the matter by the Stanley board, that Stanley would consider a proposal in which Black & Decker stockholders received 1.250 shares of Stanley common stock for each share of Black & Decker common stock and the board of the combined company consisted of nine former Stanley directors and five former Black & Decker directors.

 

On October 1 and October 2, 2009, James M. Loree, Stanley’s Chief Operating Officer, and Mr. Fenton spoke by phone and reviewed the various terms that had been discussed by Stanley’s and Black & Decker’s respective financial advisors as well as the timing of upcoming Stanley and Black & Decker board meetings. During the course of the conversations, Mr. Fenton and Mr. Loree each updated the other generally on his company’s financial performance during the third quarter of 2009. Mr. Loree and Mr. Fenton discussed the fact that the parties’ most recent discussions concerning the terms of a potential transaction were not significantly different, that the transaction appeared to offer a compelling financial proposition to both companies and their stockholders and that, if they decided to proceed with further discussions, it was the hope of each of Mr. Loree and Mr. Fenton that the parties would be able to resolve the open issues. Mr. Fenton indicated that Black & Decker management would present the recently discussed terms to the Black & Decker Transaction Committee as soon as Stanley management reviewed such terms with the Stanley board and the Stanley board was supportive of pursuing a possible transaction on such terms.

 

On October 3, 2009, the Stanley board of directors held a special meeting. Among other matters, the Stanley board discussed the items that remained open between the parties, including the exchange ratio and the role and terms of employment of Mr. Archibald at the combined company. At the conclusion of this discussion, the Stanley board authorized Stanley management and its advisors to continue to pursue the possible transaction on, among other terms, an exchange ratio of 1.250.

 

On or about October 4, 2009, Mr. Lundgren called Mr. Archibald and advised him that the Stanley board was willing to continue discussing a transaction at a 1.250 exchange ratio. Mr. Lundgren also stated that Stanley was willing to offer Mr. Archibald the role of Executive Chairman of the combined company on certain terms and conditions of employment. In the course of the conversation, Mr. Archibald raised the possibility of an exchange ratio of 1.275 and having seven, as opposed to five, directors from Black & Decker join the board of directors of the combined company.

 

On October 7, 2009, the Black & Decker Transaction Committee convened a meeting and received an update from Black & Decker management regarding the discussions with Stanley and its financial advisors since the last Black & Decker Transaction Committee meeting in August. At the meeting, Black & Decker management presented to the Black & Decker Transaction Committee the revised proposal that had been approved by the Stanley board of directors and reviewed with the members of the Black & Decker Transaction Committee the preliminary financial results of Black & Decker’s quarter ended September 27, 2009. The Black & Decker Transaction Committee also discussed the fact that Stanley’s original proposal and revised

proposal contemplated a commitment from Mr. Archibald to remain with the combined company after the closing to ensure a successful integration of the companies and achievement of the cost synergies that would be important in realizing the intended stockholder value associated with the transaction, and reviewed the terms and conditions under which Stanley proposed that Mr. Archibald remain with the combined company as Executive Chairman. The Black & Decker Transaction Committee also reviewed the terms of the Stanley proposal relating to other matters, including the composition of the Stanley board of directors following completion of the merger and the treatment of other Black & Decker officers and employees. At the conclusion of the meeting, the Black & Decker Transaction Committee confirmed that the revised Stanley proposal was consistent with the type of transaction that the Black & Decker board had indicated would be required, and concluded that it would be advisable for the Black & Decker board to consider the revised proposal and to authorize the Black & Decker Transaction Committee and Black & Decker management to evaluate the proposal further.

 

Following the Black & Decker Transaction Committee meeting on October 7, Mr. Archibald met or spoke by phone with the Black & Decker directors individually to update them on the recent developments with Stanley in advance of the regularly scheduled meeting of the Black & Decker board on October 15, 2009. Mr. Fenton joined Mr. Archibald for several of these discussions and meetings with the Black & Decker directors.

 

On October 15, 2009, the Black & Decker board held a regularly scheduled board meeting. At that meeting, the Black & Decker board reviewed the financial performance of Black & Decker for the quarter ended September 27, 2009, as well as Black & Decker management’s expectations for the balance of the year. The Black & Decker Transaction Committee and Black & Decker management reviewed with the Black & Decker board the substance and course of discussions with Stanley since the Black & Decker board meeting in July as well as the actions taken by the Black & Decker Transaction Committee since the July meeting, the terms and conditions of the revised Stanley proposal, the terms and conditions under which Mr. Archibald would remain with the combined company as Executive Chairman, the terms of the Stanley proposal relating to other matters, including the composition of the Stanley board of directors following completion of the merger and the treatment of other Black & Decker officers and employees, the conclusion of the Black & Decker Transaction Committee that the revised Stanley proposal was consistent with the requirements of the Black & Decker board in the discussions at the July board meeting, and the recommendation of the Black & Decker Transaction Committee that the Stanley proposal should be considered and evaluated further to determine if the proposal was in the best interests of Black & Decker and its stockholders. The Black & Decker board reviewed a financial analysis of the benefits to Black & Decker and its stockholders of the revised Stanley proposal and various elements of value that were inherent in the proposal, including the present value of the cost synergies that were anticipated in connection with a combination of Stanley’s and Black & Decker’s businesses and the extent to which Black & Decker’s stockholders would share in the value of the cost synergies, and compared the potential value to Black & Decker’s stockholders of a transaction with Stanley to the value to the Black & Decker stockholders of the company on a stand-alone basis. After extensive discussion about the revised Stanley proposal, the Black & Decker board concluded that it would be advisable for the Black & Decker board to consider the revised proposal and authorized the Black & Decker Transaction Committee and Black & Decker management, together with Black & Decker’s financial, legal and other advisors, to evaluate the proposal and to make a recommendation to the Black & Decker board as to whether the revised Stanley proposal was in the best interests of Black & Decker and its stockholders. The Black & Decker board also authorized Black & Decker management and the Black & Decker Transaction Committee, as part of its evaluation of the Stanley proposal, to commence negotiations with Stanley and its counsel regarding the terms and conditions of a possible merger agreement.

 

Immediately following the conclusion of the meeting of the Black & Decker board on October 15, 2009, the Black & Decker Transaction Committee met and authorized management to retain additional advisors to, among other things, assist management, the Black & Decker Transaction Committee and the Black & Decker board in their financial due diligence of Stanley and their evaluation of the potential cost synergies in connection with the proposed combination of Stanley’s and Black & Decker’s businesses.

Also on October 15, 2009, Mr. Archibald called Mr. Lundgren and advised him that, while the Black & Decker board had a predisposition for Black & Decker to remain independent, the Black & Decker board recognized the possible cost synergies and the benefits to Black & Decker and its stockholders that could come from a transaction with Stanley if the cost synergies were realized. He indicated to Mr. Lundgren that the Black & Decker board had authorized management to continue discussions with Stanley based on an exchange ratio of 1.275 shares of Stanley common stock for each share of Black & Decker common stock, with a minimum of six Black & Decker directors being added to the Stanley board. Mr. Archibald stressed the view of the Black & Decker directors that the achievement of the cost synergies was an integral part of the value proposition in the transaction and wanted to make sure that there was sufficient Black & Decker representation on the Stanley board to ensure that the understanding of Black & Decker’s businesses was appropriately reflected in the board deliberations following completion of the merger. Mr. Archibald asked Mr. Lundgren to request that the Stanley board consider adding seven directors from Black & Decker to the Stanley board as part of the transaction.

 

On October 16, 2009, the Stanley board held a regular meeting. Among other matters, the Stanley board considered the discussions with Black & Decker that had taken place since their last board meeting on October 3, 2009 and the terms and conditions of the proposed transaction, including those that remained subject to further negotiation. Additionally, Deutsche Bank and Goldman Sachs discussed with the Stanley board a financial analysis of the proposed transaction and an overview of the recent financial performance of both Stanley and Black & Decker. The Stanley board authorized management and its advisors to continue to negotiate the potential transaction.

 

During the period from October 16 until October 21, 2009, representatives of Stanley and Black & Decker management and Stanley’s and Black & Decker’s financial advisors exchanged additional information relating to the prospects for achieving cost synergies in connection with the combination of Stanley’s and Black & Decker’s businesses and shared additional non-public information relating to each of the companies and their respective businesses, operating performance and updated forecasts.

 

On October 22, 2009, representatives of Stanley and Black & Decker management, Stanley’s and Black & Decker’s financial advisors and other advisors assisting each of the companies in evaluating the proposed transaction met at Cravath’s offices in New York City to review, among other matters, the prospects for achieving cost synergies in connection with the combination of Stanley’s and Black & Decker’s businesses.

 

On October 23, 2009 and October 26, 2009, Stanley’s and Black & Decker’s management, financial and legal advisors and other advisors assisting each of the companies in evaluating the proposed transaction met at Cravath’s offices in New York City. At these meetings, the companies engaged in mutual financial and legal due diligence, reviewed the financial results of each company for the third quarter of 2009 and the forecasts for the balance of 2009, reviewed financial forecasts of the companies for 2010 and 2011, reviewed the cost synergies identified by the parties in their discussions and the prospects for achieving those cost synergies, and reviewed the integration challenges and opportunities and the approach Stanley would take to integrating the two companies. In connection with these meetings, Cravath and Hogan & Hartson discussed the terms of the merger agreement and related documents and discussed various due diligence matters. In these discussions, a number of issues in the draft merger agreement and related documentation were negotiated, including governance matters relating to the board, transaction certainty, the treatment of Black & Decker equity awards, and restrictions on the parties’ respective businesses prior to the closing of the merger. In the course of these meetings and discussions, Stanley confirmed that an exchange ratio of 1.275 was acceptable, but stated that more than six directors was not, given the other terms being offered by Stanley, including most notably the premium that the Black & Decker stockholders would receive in the transaction, and concerns regarding the functionality of such a large board.

 

On October 24, 2009, the Compensation and Organization Committee of the Stanley board of directors held a special meeting to discuss, among other things, the proposed terms and conditions of Mr. Archibald’s possible employment as Executive Chairman of the combined company and the terms and conditions of Mr. Lundgren’s and Mr. Loree’s proposed employment arrangements that would become effective upon completion of the transaction. During the course of this discussion, the Compensation and Organization

Committee received a presentation and recommendations from an independent compensation consultant retained by Stanley to assist with the compensation arrangements to be entered into in connection with the proposed transaction. At the conclusion of this discussion, the Compensation and Organization Committee authorized the negotiation of the compensation arrangements with Mr. Archibald, Mr. Lundgren and Mr. Loree. Shortly thereafter, Cravath sent a draft of the proposed executive chairman agreement to Mr. Archibald’s counsel.

 

From October 23 through October 30, Cravath and Hogan & Hartson continued to discuss various provisions of the merger agreement and exchanged further drafts of the merger agreement. Additionally, from October 24 through October 30, Cravath and Mr. Archibald’s counsel discussed and exchanged drafts of the executive chairman agreement.

 

On October 29, 2009, the Black & Decker Transaction Committee met with representatives of Black & Decker management, J.P. Morgan and Hogan & Hartson, representatives of Miles & Stockbridge, P.C., Black & Decker’s regular outside corporate counsel, and representatives of the other advisors that had been engaged to assist the Black & Decker Transaction Committee and the Black & Decker board in connection with the evaluation of the revised Stanley proposal. At the beginning of the meeting, the members of the Black & Decker Transaction Committee were given a package containing the presentations to be reviewed with the Black & Decker Transaction Committee and the Black & Decker board at its meetings that day, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement. At the meeting, representatives of Hogan & Hartson provided an overview of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Black & Decker management and the Black & Decker advisors reviewed Stanley’s businesses, financial results and the cost synergy potential in connection with the proposed transaction as well as the due diligence review of Stanley’s businesses, representatives of J.P. Morgan reviewed the Stanley proposal and Black & Decker’s prospects on a stand-alone basis, Hogan & Hartson and Miles & Stockbridge reviewed the corporate governance and certain other aspects of the Stanley proposal, including the composition of the Stanley board of directors following closing, the proposed terms and conditions of Mr. Archibald’s employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker as well as the treatment of other Black & Decker officers and employees, and Hogan & Hartson reviewed the principal terms and conditions of the merger agreement proposed by Stanley in connection with the transaction and the substance of the negotiations between the parties to date. The Black & Decker Transaction Committee considered the fact that, while the transaction would result in Black & Decker becoming a wholly owned subsidiary of Stanley, the Black & Decker stockholders would remain significant stockholders of the combined company and would be the beneficiaries of any cost synergies that might be achieved as a result of the transaction. At the end of the meeting, Mr. Archibald and the other members of Black & Decker management and all of the advisors, other than Hogan & Hartson, Miles & Stockbridge and the compensation consultants to the Black & Decker board, left the meeting. The Black & Decker Transaction Committee then discussed the Stanley proposal and the terms and conditions of Mr. Archibald’s employment agreement with Black & Decker as well as the proposed employment arrangement proposed by Stanley with Mr. Archibald. After discussion of these issues, Mr. Archibald and Mr. Fenton then rejoined the meeting. After further discussion, the Black & Decker Transaction Committee concluded that, while it was not making a final decision as to the advisability of the transaction, the Black & Decker Transaction Committee believed that the proposed transaction appeared to offer a compelling value proposition to Black & Decker and its stockholders and it was comfortable recommending to the Black & Decker board that the Black & Decker Transaction Committee and Black & Decker management continue negotiations of the merger agreement and the final terms and conditions of the transaction with a view toward making a final recommendation to the Black & Decker board promptly following the completion of its work.

 

On October 29, 2009, following the conclusion of the meeting of the Black & Decker Transaction Committee, the Black & Decker board met with representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson and Miles & Stockbridge, and representatives of the other advisors that had been engaged to assist the Black & Decker Transaction Committee and the Black & Decker board in connection with the

evaluation of the revised Stanley proposal. At the beginning of the meeting, the members of the Black & Decker board were given a package containing the presentations to be reviewed with the Black & Decker board at its meetings that day, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement. At this meeting, representatives of Hogan & Hartson provided an overview of applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Black & Decker management and the Black & Decker advisors reviewed Stanley’s businesses, financial results and the cost synergy potential in connection with the proposed transaction as well as the due diligence review of Stanley’s businesses, representatives of J.P. Morgan reviewed the Stanley proposal and Black & Decker’s prospects on a stand-alone basis, Hogan & Hartson and Miles & Stockbridge reviewed the corporate governance and certain other aspects of the Stanley proposal, including the composition of the Stanley board of directors following closing, the proposed terms and conditions of Mr. Archibald’s employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker as well as the treatment of other Black & Decker officers and employees, and Hogan & Hartson reviewed the principal terms and conditions of the merger agreement proposed by Stanley in connection with the transaction and the substance of the negotiations between the parties to date. The Black & Decker board discussed a number of the provisions of the draft merger agreement and the regulatory requirements in connection with the consummation of the transaction, including the provisions relating to the commitments of Stanley and Black & Decker to proceed with stockholders’ meetings to consider the transaction, the termination fee payable by Black & Decker or Stanley and the circumstances under which such a termination fee would be payable, corporate governance issues and certain provisions relating to transaction certainty. At the end of the meeting, Mr. Archibald and the other members of Black & Decker management and all of the advisors, other than Hogan & Hartson, Miles & Stockbridge and the compensation consultants to the Black & Decker board, left the meeting. The Black & Decker board then discussed the Stanley proposal and the terms and conditions of Mr. Archibald’s employment agreement with Black & Decker as well as the proposed employment arrangement proposed by Stanley with Mr. Archibald. After discussion of these issues, Mr. Archibald and Mr. Fenton, along with J.P. Morgan, rejoined the meeting, the Black & Decker board discussed with Mr. Archibald the terms and conditions of his employment as Executive Chairman of Stanley and the terms and conditions of Mr. Archibald’s employment arrangements with Black & Decker, and the Black & Decker board advised Black & Decker management and the Black & Decker Transaction Committee that it should continue its negotiations of the merger agreement and the final terms and conditions of the transaction with a view toward making a final recommendation to the Black & Decker board promptly following the completion of its work.

 

Following the conclusion of the Black & Decker board meeting on October 29, 2009, Mr. Archibald called Mr. Lundgren and indicated that the Black & Decker board was continuing its evaluation of the Stanley proposal and that, while no decision had been reached, the Black & Decker board had authorized Black & Decker management and the Black & Decker Transaction Committee to continue its negotiations of the merger agreement and the final terms and conditions of the transaction.

 

On October 30, 2009, Stanley’s and Black & Decker’s management and financial and other advisors assisting each of the companies in evaluating the proposed transaction met at Cravath’s offices in New York City. At these meetings, the parties engaged in various discussions regarding the proposed transaction.

 

On October 31, 2009, each of the Black & Decker directors was provided with a revised version of the merger agreement that had been discussed by Hogan & Hartson and Cravath and a related summary of its terms that reflected those further negotiations between the parties.

 

From the conclusion of the Black & Decker board meeting on October 29 through the end of the day on October 31, 2009, Mr. Archibald had a number of conversations with Mr. Fenton and with the members of the Black & Decker board regarding the terms of Mr. Archibald’s compensation arrangements with Black & Decker and the proposed terms and conditions of Mr. Archibald’s agreement with Stanley under which he would become Executive Chairman of Stanley following closing of the transaction. Mr. Archibald advised the Black & Decker directors that he was willing to modify his existing employment arrangements with Black & Decker to eliminate the severance payable under those arrangements as a result of the closing of the Stanley transaction, to eliminate the accelerated vesting otherwise associated with his stock options and restricted

stock as a result of the terms of Black & Decker’s equity incentive plans and to delete the tax gross up provisions of his existing arrangement as it related to the Stanley transaction. Mr. Archibald indicated that he would instruct his counsel who was working with Cravath on the draft executive chairman agreement to make the appropriate changes to the document.

 

On October 31, 2009, the Stanley board met with representatives of Stanley management, Deutsche Bank, Goldman Sachs and Cravath. In advance of the meeting, the members of the Stanley board were sent a package containing the presentations to be reviewed with the Stanley board, including a copy of the most recent draft of the merger agreement together with a summary of the principal terms of the merger agreement, and the most recent drafts of the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree, together with summaries of the principal terms thereof. At the meeting, among other things, representatives of Cravath discussed with the Stanley board the applicable legal standards in the context of considering a business combination transaction of the type proposed, Stanley management discussed the results of its due diligence investigation of Black & Decker, including their determination of the cost synergy potential in connection with the proposed transaction, representatives of Deutsche Bank and Goldman Sachs discussed their financial analysis of the proposed transaction and Cravath discussed the principal terms and conditions of the merger agreement. At that point, all non-board members, other than Cravath, Mark J. Mathieu, Vice President, Human Resources, and Bruce H. Beatt, Vice President, General Counsel and Secretary, left the meeting. Thereafter, the Stanley board (including all the members of Stanley’s Compensation and Organization Committee) discussed the proposed terms and conditions of Mr. Archibald’s executive chairman agreement. After discussion of this agreement, Mr. Lundgren left the meeting and the Stanley board (including all the members of Stanley’s Compensation and Organization Committee) met in executive session to discuss the terms and conditions of the proposed employment agreements with Mr. Lundgren and Mr. Loree. The Stanley board also generally discussed in executive session the proposed transaction with Black & Decker, and authorized Stanley management and Stanley’s advisors to finalize the terms of the transaction.

 

Between October 31 and November 2, 2009, representatives of Stanley, Black & Decker, Cravath and Hogan & Hartson finalized the terms of the merger agreement. At the same time, Cravath and Mr. Archibald’s counsel finalized the terms of Mr. Archibald’s executive chairman agreement.

 

On November 2, 2009, the Black & Decker Transaction Committee met with representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson and Miles & Stockbridge. Prior to this meeting the members of the Black & Decker Transaction Committee and the other members of the Black & Decker board had been provided with a summary of the merger agreement and copies of the most recent drafts of the merger agreement as well as a summary of the terms of Mr. Archibald’s proposed executive chairman agreement with Stanley and the final draft of the executive chairman agreement. At this meeting, representatives of Hogan & Hartson reminded the directors of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Mr. Archibald reviewed with the Black & Decker Transaction Committee the changes he had agreed to make to his existing employment arrangements with Black & Decker, Miles & Stockbridge reviewed the terms and conditions of Mr. Archibald’s employment agreement and related benefits with Black & Decker, as proposed to be amended, and the terms and conditions of Mr. Archibald’s proposed executive chairman agreement with Stanley, and Hogan & Hartson reviewed certain corporate governance and other aspects of the Stanley proposal, the terms and conditions of the merger agreement and the regulatory approval process for the proposed transaction. In the course of the meeting, representatives of J.P. Morgan reviewed J.P. Morgan’s financial analysis of the proposed transaction and indicated that they were prepared to deliver J.P. Morgan’s opinion to the Black & Decker board that, as of November 2, 2009 and based upon and subject to the factors and assumptions set forth in its written opinion, the 1.275 exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders. Following a discussion among the members of the Black & Decker Transaction Committee, the Black & Decker Transaction Committee unanimously concluded that the merger on the terms and conditions presented was advisable and in the best interests of Black & Decker and its stockholders and resolved to recommend to the full Black & Decker board the merger and the other actions required to give effect to the merger.

Following the meeting of the Black & Decker Transaction Committee on November 2, 2009, the Black & Decker board convened a meeting to consider the Stanley proposal. Present at the meeting were representatives of Black & Decker management, J.P. Morgan, Hogan & Hartson and Miles & Stockbridge. At this meeting, representatives of Hogan & Hartson reminded the Black & Decker directors of the applicable legal standards in the context of considering a business combination transaction of the type proposed by Stanley, Mr. Archibald reviewed with the Black & Decker board the changes he had agreed to make to his existing employment arrangements with Black & Decker, Miles & Stockbridge reviewed the terms and conditions of Mr. Archibald’s employment agreement and related benefits with Black & Decker, as proposed to be amended, and the terms and conditions of Mr. Archibald’s proposed executive chairman agreement with Stanley, and Hogan & Hartson reviewed certain corporate governance and other aspects of the Stanley proposal, the terms and conditions of the merger agreement and the regulatory approval process for the proposed transaction. In the course of the meeting, representatives of J.P. Morgan reviewed J.P. Morgan’s financial analysis of the proposed transaction and delivered J.P. Morgan’s written and oral opinion to the Black & Decker board that, as of November 2, 2009 and based upon and subject to the factors and assumptions set forth in its written opinion, the 1.275 exchange ratio in the proposed merger was fair, from a financial point of view, to Black & Decker’s common stockholders. After each of the presentations had been given, Mr. Archibald advised the Black & Decker board that he had given a great deal of thought to the proposed transaction and believed that the transaction was both strategically and financially compelling from the perspective of Black & Decker and its stockholders and that he was very supportive of the transaction. Mr. Archibald indicated that in light of the position he would have as Executive Chairman of the combined company and the interest he would have by virtue of his employment arrangements following the closing, he intended to abstain on the vote on the transaction. Following a discussion of the information that had been presented at the meeting and at the earlier meetings of the Black & Decker board and following further deliberations, with Mr. Archibald abstaining on the matter, the remaining members of the Black & Decker board unanimously approved the merger agreement and the merger in accordance with Maryland law and recommended that Black & Decker’s stockholders approve the merger on the terms presented. The Black & Decker board authorized the appropriate officers of Black & Decker to finalize, execute and deliver the merger agreement and related documents.

 

Also on November 2, 2009, the Stanley board convened a meeting to consider the proposed transaction. Present at the meeting were representatives of Stanley management, Deutsche Bank, Goldman Sachs and Cravath. At the meeting, among other things, Stanley management discussed with the Stanley board the current status of negotiations with Black & Decker, including the recent changes agreed to by Mr. Archibald with respect to his employment arrangements, Deutsche Bank and Goldman Sachs discussed their financial analysis of the proposed transaction and delivered their respective oral opinions, which opinions were confirmed by delivery of written opinions each dated November 2, 2009, to the effect that as of such date, and based on and subject to various assumptions, matters considered and limitations described in such opinions (as more fully described below under the caption “— Opinions of Stanley’s Financial Advisors”), the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement was fair, from a financial point of view, to Stanley, and Cravath discussed the most recent drafts of the merger agreement and the employment agreements and the changes made to such agreements since the last drafts circulated to the Stanley board. During such discussion, the Compensation and Organization Committee of the Stanley board unanimously recommended to the Stanley board that the Stanley board approve the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree. Following further discussion, the Stanley board unanimously approved the merger agreement and the merger and the employment agreements with Mr. Archibald, Mr. Lundgren and Mr. Loree and recommended that Stanley shareholders approve the issuance of Stanley stock in connection with the merger and the amendment of Stanley’s certificate of incorporation as contemplated by the merger agreement. The Stanley board authorized the appropriate officers of Stanley to finalize, execute and deliver the merger agreement, the employment agreements and related documents.

 

Following the board meetings, all agreements were finalized and the merger agreement was then executed by Black & Decker, Stanley and Blue Jay Acquisition Corp and the employment agreements were executed by Stanley, Mr. Archibald, Mr. Lundgren and Mr. Loree, as applicable. On November 2, 2009, following the

closing of trading on the NYSE, Black & Decker and Stanley issued a joint press release announcing the transaction.

 

At a special meeting held on November 2, 2009, the Stanley board of directors determined that the merger and the other transactions contemplated by the merger agreement, including the issuance of Stanley common stock in the merger and the amendment of Stanley’s certificate of incorporation, are advisable and in the best interests of Stanley and its shareholders. Accordingly, the Stanley board of directors recommends that the Stanley shareholders vote “FOR” the proposal to issue shares of Stanley common stock in the merger and “FOR” the proposal to amend Stanley’s certificate of incorporation to increase the number of authorized shares of Stanley common stock and to change Stanley’s name to “Stanley Black & Decker, Inc.”. In reaching these determinations, the Stanley board of directors consulted with Stanley’s management and its legal, financial and other advisors, and also considered numerous factors, including the following factors which the Stanley board of directors viewed as supporting its decisions:

 

 

 

In addition to considering the factors described above, the Stanley board of directors also considered the following factors:

 

 

The Stanley board of directors weighed the foregoing against a number of potentially negative factors, including:

 

 

 

This discussion of the information and factors considered by the Stanley board of directors includes the principal positive and negative factors considered by the board of directors, but is not intended to be exhaustive and may not include all of the factors considered by the board of directors of Stanley. In view of the wide variety of factors considered in connection with its evaluation of the merger and the other transactions contemplated in connection with the merger, and the complexity of these matters, the Stanley board of directors did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the other transactions contemplated in connection with the merger and to make its recommendations to Stanley shareholders. Rather, the board of directors of Stanley viewed its decisions as being based on the totality of the information presented to it and the factors it considered. In addition, individual members of the Stanley board of directors may have given differing weights to different factors.

 

Stanley has retained Deutsche Bank and Goldman Sachs as its financial advisors to advise the Stanley board of directors in connection with the merger. Deutsche Bank and Goldman Sachs are collectively referred to herein as “Stanley’s Financial Advisors”.

 

On November 2, 2009, at a meeting of the Stanley board of directors held to evaluate the proposed merger, Stanley’s Financial Advisors delivered to the Stanley board of directors their respective oral opinions, which opinions were confirmed by delivery of written opinions each dated November 2, 2009, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in such opinions, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock pursuant to the merger agreement was fair, from a financial point of view, to Stanley.

 

The Deutsche Bank opinion and the Goldman Sachs opinion, the full texts of which describe the assumptions made, procedures followed, matters considered and limitations on the review undertaken, are included in this joint proxy statement/prospectus as Annex B and Annex C, respectively. The summaries of the Deutsche Bank opinion and Goldman Sachs opinion described below are qualified in their entirety by reference to the full texts of the opinions.

 

Opinion of Deutsche Bank

 

Pursuant to an engagement letter dated July 10, 2009, Deutsche Bank acted as Stanley’s financial advisor in connection with the merger. At the meeting of the Stanley board of directors on November 2, 2009, Deutsche Bank rendered its oral opinion, subsequently confirmed in writing, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in the Deutsche Bank opinion, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley.

The full text of the written opinion of Deutsche Bank, dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken by Deutsche Bank in rendering its opinion, is included as Annex B to this joint proxy statement/prospectus. Stanley encourages its shareholders to read the opinion carefully in its entirety. The Deutsche Bank opinion does not express an opinion or recommendation as to how any holder of Stanley common stock should vote with respect to the transactions contemplated by the merger agreement. The summary of the Deutsche Bank opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion included as Annex B.

 

In connection with its role as Stanley’s financial advisor, and in arriving at its opinion, Deutsche Bank, among other things:

 

 

Deutsche Bank did not assume responsibility for independent verification of, and did not independently verify, any information, whether publicly available or furnished to it, concerning Stanley or Black & Decker, including, without limitation, any financial information considered in connection with the rendering of its opinion. Accordingly, for purposes of its opinion, Deutsche Bank, with Stanley’s permission, assumed and relied upon the accuracy and completeness of all such information. Deutsche Bank did not conduct a physical inspection of any of the properties or assets, and did not prepare or obtain any independent evaluation or appraisal of any of the assets or liabilities (including any contingent, derivative or off-balance-sheet assets and liabilities), of Stanley or Black & Decker or any of their respective subsidiaries, nor did Deutsche Bank evaluate the solvency or fair value of Stanley or Black & Decker under any state or federal law relating to bankruptcy, insolvency or similar matters. With respect to financial forecasts and projections, including the analyses and forecasts of the Transaction Synergies, made available to Deutsche Bank and used in its analyses, Deutsche Bank assumed with Stanley’s permission that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Stanley as to the matters covered thereby. In rendering its opinion, Deutsche Bank expressed no view as to the reasonableness of such forecasts

and projections, including the Transaction Synergies, or the assumptions on which they were based. Deutsche Bank’s opinion was necessarily based upon economic, market and other conditions, and the information made available to it, as of the date thereof. Deutsche Bank expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which it become aware after the date thereof.

 

For purposes of rendering its opinion, Deutsche Bank assumed with Stanley’s permission that, in all respects material to its analysis, the transactions contemplated by the merger agreement will be consummated in accordance with its terms, without any material waiver, modification or amendment of any term, condition or agreement. Deutsche Bank also assumed that all material governmental, regulatory, contractual or other approvals and consents required in connection with the consummation of the merger will be obtained and that in connection with obtaining any necessary governmental, regulatory, contractual or other approvals and consents, no material restrictions, terms or conditions will be imposed. Deutsche Bank is not a legal, regulatory, tax or accounting expert and relied on the assessments made by Stanley and its advisors with respect to such issues.

 

The Deutsche Bank opinion was approved and authorized for issuance by a fairness opinion review committee and was addressed to, and for the use and benefit of, the Stanley board of directors. The opinion was limited to the fairness, from a financial point of view, to Stanley of the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock. Stanley did not ask Deutsche Bank to, and its opinion did not, address the fairness of the transactions contemplated by the merger agreement, or any consideration received in connection therewith, to the holders of any class of securities, creditors or other constituencies of Stanley, nor did it address the fairness of the contemplated benefits of the transactions contemplated by the merger agreement. Deutsche Bank did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or transactions contemplated thereby or any term or aspect of any other agreement or instrument contemplated by the merger agreement or entered into or amended in connection with the transactions contemplated thereby. Deutsche Bank expressed no opinion as to the merits of the underlying decision by Stanley to engage in the transactions contemplated by the merger agreement or the relative merits of such transactions as compared to any alternative business strategies, nor did Deutsche Bank express an opinion or recommendation as to how any holder of Stanley’s common stock should vote with respect to the transactions contemplated by the merger agreement. Deutsche Bank did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by any of the officers, directors, or employees of Stanley or Black & Decker, or any class of such persons, in connection with the transactions contemplated by the merger agreement whether relative to the amounts to be received by any other person pursuant to the merger agreement or otherwise. Deutsche Bank’s opinion did not in any manner address the prices at which Stanley common stock will trade following the announcement or consummation of the transactions contemplated by the merger agreement.

 

Deutsche Bank is an affiliate of Deutsche Bank AG. During the two years preceding the date of the opinion letter, Deutsche Bank AG and its affiliates had not provided any significant investment banking, commercial banking (including extension of credit) or other financial services to Black & Decker, Stanley or their respective affiliates. Deutsche Bank AG and its affiliates may provide investment and commercial banking services to Stanley, Black & Decker or their respective affiliates in the future for which Deutsche Bank would expect Deutsche Bank AG and its affiliates to receive compensation. In the ordinary course of business, Deutsche Bank AG and its affiliates may actively trade in the securities and other instruments and obligations of Black & Decker, Stanley, or their respective affiliates for their own accounts and for the accounts of their customers. Accordingly, Deutsche Bank AG and its affiliates may at any time hold a long or short position in such securities, instruments and obligations.

 

The Stanley board of directors engaged Deutsche Bank as a financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Pursuant to its engagement letter with Stanley, Deutsche Bank will be paid a transaction fee for its services as financial advisor to Stanley in connection with the merger in the amount of approximately $14 million, a portion of which was paid upon delivery of its opinion and a substantial portion of which is

payable contingent upon completion of the merger. Stanley also agreed to reimburse Deutsche Bank for its expenses, and to indemnify Deutsche Bank against certain liabilities, in connection with its engagement.

 

Opinion of Goldman Sachs

 

Pursuant to an engagement letter dated July 23, 2009, Goldman Sachs acted as Stanley’s financial advisor in connection with the merger. At the meeting of the Stanley board of directors on November 2, 2009, Goldman Sachs rendered its oral opinion, subsequently confirmed in writing, to the Stanley board of directors to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations set forth in the Goldman Sachs opinion, the exchange ratio of 1.275 shares of Stanley common stock to be issued by Stanley in exchange for each share of Black & Decker common stock was fair, from a financial point of view, to Stanley.

 

The full text of the written opinion of Goldman Sachs, dated November 2, 2009, which sets forth the assumptions made, matters considered and limits on the review undertaken by Goldman Sachs in rendering its opinion, is included as Annex C to this joint proxy statement/prospectus. Stanley encourages its shareholders to read the opinion carefully in its entirety. The Goldman Sachs opinion is not a recommendation as to how any holder of Stanley common stock should vote with respect to the merger or any other matter. The summary of the Goldman Sachs opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion included as Annex C.

 

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things: